Personalization Is Key to Effective Employee Rewards
Employers must do more to give employees what they need and want, so many are reevaluating rewards and recognition programs and looking for ways to ensure that employees feel seen, heard and valued for their contributions. Here's why Amy Spurling, founder and CEO of Compt, thinks stipend payments might be key to future growth.
For many, the pandemic translated into extra work. Among remote workers, a Robert Half survey revealed that nearly 70% say they now work on weekends and 45% say they work more hours during the week than they did before.
So how are organizations rewarding employees for all this extra work? Let's just say there's still a lot of room for improvement in the realm of employee rewards and recognition.
As competition for top talent continues, employers must do more to give employees what they need and want. According to People at Work 2023: A Global Workforce View from the ADP Research Institute®, employers continue to innovate when it comes to initiatives to support positive mental health.
And in an effort to improve the employee experience, worker productivity and potential business outcomes, employers are reevaluating employee rewards and looking for ways to ensure that employees feel seen, heard and valued for their contributions.
To explore the next phase in the evolution of rewarding employees, we spoke with Amy Spurling, founder and CEO of Compt, which provides a solution to help employers reward and support their employees via stipend payments. Spurling's unique perspective as an employer as well as a service provider in the employee rewards space informs the valuable observations and actionable insights below.
Finding new ways to support employees is critical
At the beginning of the pandemic, the challenge of "supporting employees" meant implementing the technology (hardware and software) that they needed in order to be productive from home, and that was when we were thinking of this as a short-term detour on the road to "getting back to normal."
As the months ticked by, many employers realized the need to create a new normal by doing more: adding or extending leave policies, allowing for more flexible work schedules and offering perks that tangibly improve employees' lives, such as childcare and mental health services.
The notion of giving employees what they want isn't new to the rewards conversation. For years, employers have added perks and benefits in an attempt to broaden the appeal, such as gym memberships, childcare reimbursement, student loan support, product discounts and so forth.
"Any perk you bring in, only 2-5% of people are going to use it," Spurling said. "Childcare, student loan repayment, other cool perks have very low utilization."
The rapid shift to remote work meant employers were forced to grapple with new questions. "How do I make sure you're productive at home?" Spurling said. "And how do I support your productivity? It's a really fantastic positive shift in the market, and companies are thinking more around, 'how do we create something a lot more inclusive?'"
Enter employee stipends. Giving employees money to spend however they choose can dramatically impact the employee experience and help organizations improve retention.
Invest now or reward later?
As we watch wages change in response to the demands of the talent market, we're reminded that the employer-employee relationship is, at its core, a monetary transaction. This is why perks like free snacks and access to foosball tables don't measurably improve employee retention or productivity.
Historically, employee rewards and recognition programs have been mostly reactive: Wait for an employee to do something noteworthy, and then swoop in with a prize. Through the pandemic, and especially as younger generations of workers move up in the business world, we're seeing a shift in priorities. Employees want to be acknowledged and rewarded for the skills and talents they bring to the organization, and they want employers to be proactive.
So, why not just pay everyone a little more? Salary increases may be appropriate, but a raise doesn't actually do much for employee satisfaction. Often, employees may not even feel those extra dollars.
"Imagine that, pretax, $100 goes into your paycheck," Spurling said. "You don't notice it. You put it towards bills or your 529 for your kids or whatever it is. You don't think about it."
Using stipends to reward employees lands differently because stipend payments create an opportunity for employees to make decisions about how to spend that money. They can choose to invest the money, pay for a massage, buy something from a local business or whatever would benefit them at the time. Empowering employees to spend like this is the key to showing them how much you value them.
And the bottom line reflects the benefits as well. Organizations that started using Compt's rewards program before the pandemic grew while many of their competitors struggled to stay afloat. "On average, their teams grew 121% in a market where everybody is scrambling for talent," Spurling said. "These companies are doing better because they're finding a way to do personalization and really support teams in a way that every single person can do something that matters to them as an individual."
Adopting new ideas about employee rewards for the long haul
The global health crisis helped shed light on new perspectives related to employee rewards and their impact on the employee experience, but these weren't passing trends that faded away. These realizations marked a historic shift in the way employers should think about rewarding employees from now on.
"The way companies are thinking about employee rewards and recognition is changing," Spurling said. "Before, it was about keeping employees in the building. If they stay here, they'll do more work. Now nobody's in a building, period. And you're also hoping like all heck that you don't lose your people. You can't afford to lose 40% of your team when you're also trying to hire. So the dynamic has shifted. Now it's thinking more about how you can support employees and make sure they're productive at home, which is really powerful."
The continuation of remote and hybrid work continues employers' concerns about helping employees feel connected to one another — to members of their team as well as other employees within the organization. Incorporating opportunities for peer recognition can remedy this.
"We're seeing a shift in how recognition happens," Spurling said. "It's not just top-down anymore. Now it's about rethinking peer-to-peer recognition in a hybrid or remote workforce. You get so many more cross-team connections happening when people recognize the amazing work other people are doing or how they're living up to the company values. We've seen a huge rise in peer-to-peer recognition."
Investing in personalization
Employee stipends may be the employee rewards shortcut business leaders never knew they needed. Rather than trying to add hundreds of different, specific perks that aren't likely to be used by the majority of employees anyway, it's time to rethink employee rewards and recognition programs.
Offer options that empower employees to make decisions about what is best for them. Let them know that their contributions matter and that you care about their well-being enough to put your money where your mouth is. Investing in employees by helping them fund the things that matter to them most can lead to happier, more engaged employees and unlock growth potential across your organization.
Learn more about ADP Marketplace partner, Compt.
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