Korn Ferry Hay Group: Alternative Rewards Pay Index

When it comes to rewarding employees above and beyond base salaries, companies are prioritizing career development – more than other alternative rewards, benefits and bonuses, according to new research by the Hay Group division of Korn Ferry.

• Across all employee levels, career development programs are most likely to expand in use over the next year, as employers focus on engaging and retaining employees
• Employers widely recognize alternative rewards as an essential component of a competitive total employee rewards strategy

The Value of Alternative Rewards is Clear

Nine in ten organizations (90 percent) surveyed in Hay Group’s recent study employ four or more alternative methods of rewarding employees (including career development programs, spot cash bonuses, health and welfare benefits, enhanced capital accumulation programs, gift/merchandise programs, community impact programs, additional paid time off and other benefits/perquisites programs) as part of their human capital strategy.

More than 8 out of ten organizations surveyed said that alternative rewards are key to being an employer of choice (89 percent), remaining competitive (87 percent) and engaging employees (81 percent). Eighty-seven percent of respondents also agreed that alternative rewards are an important tool in retaining the organization’s existing talent.

At All Levels, Career Development Programs Take Precedence

Over the next year, the vast majority of organizations (71 percent) plan to increase their use of alternative rewards. More than two-thirds of respondents (69 percent) plan to expand their use of alternative rewards at the manager/professional level and below, while the rate is slightly lower for executives, at 53 percent.

Across all employee levels, career development programs are poised to see the biggest expansion in use during 2016. More than half of respondents indicate they intend to expand the use of career development programs across all employee levels, supporting the creation of a stronger bench of employees with the hard and soft skills needed to assume more challenging roles within organizations.

Cash is King in Linking Employee Recognition to Strategic Business Goals

After career development opportunities, spot cash bonuses are poised to see growing usage in many organizations for functional roles below executive levels, increasing at more than 46 percent of companies, across both manager/professional and clerical/skilled trade employee levels. These programs have grown in prevalence as organizations look to better align their strategic business objectives with employee recognition.

Alternative Rewards Only Poised to Grow in Coming Years

Longer-term, a significant majority of survey respondents (73 percent) agree that the importance of alternative approaches to employee rewards will only increase over the next three to five years, while only 2 percent believe they will decrease in importance. The Hay Group survey results show that leaders recognize the growing importance of a total rewards strategy—going much further than base salary, cash incentives and traditional benefits, to take into account everything of perceived value that the organization offers its employees—to help attract, engage and, particularly, retain talent in an increasingly competitive marketplace.