- Personalized benefits are a top priority. The most requested compensation improvement from employees is being able to customize their benefits packages, according to Mercer’s 2024 Global Talent Trends study.
- Financial wellness and career growth is center stage. Other total rewards priorities for employees include fair pay and development opportunities.
- Artificial intelligence may be key. AI will make personalizing benefits more accessible, but it should be used thoughtfully.
In an increasingly competitive hiring environment, employers are learning that recruiting and retaining talent doesn't simply come down to the benefits they offer — it's also about how much employees are able to personalize their total rewards.
The top request from employees related to improving compensation is having more types of rewards and the opportunity to personalize their rewards packages, according to Mercer's 2024 Global Talent Trends study.
Companies are listening: 51% recently made improvements in this area and 45% recently implemented total rewards technology, Mercer found. But only 15% are offering “hyper-personalized” benefits that leverage data and employee listening. This year’s Global Talent Trends study included insights from 845 C-suite executives, 1,920 HR leaders, 9,449 employees and 84 investors from across 17 geographies and 16 industries.
“Personalized benefits are becoming more of an expectation,” said Gordon Frost, global rewards solution leader at Mercer. “If some employers are offering that and others are not, employees will notice and talk about it. That ties into an employer's reputation. Are you a modern, future-focused employer who gets it, or are you stuck in the Dark Ages?”
Key Employee Priorities
Pay, health benefits, job security and flexibility are the top priorities for employees both when accepting a job and deciding to stay, according to forthcoming research from WTW.
“One of the interesting things we're seeing in emerging research is that employees are saying that work environment and office culture is important,” said Casey Hauch, managing director of employee experience at WTW. “As companies are expecting employees to be in-office full-time or a few days a week, the employee sentiment is, 'I'll come back, but you need to make it worth my while.'”
While pay transparency continues to be prioritized by workers, the concept of fair pay is moving to the forefront, ranking in Mercer's study several places higher than competitive rewards as a reason to stay in a job.
Employees also want to see a greater focus on well-being benefits and opportunities for career growth within a company.
One way employers are personalizing total rewards is through voluntary, employee-paid benefits such as pet insurance, identity theft protection, legal assistance or long-term care insurance.
Financial Wellness is Fundamental
Today's employees — even middle-class, seemingly stable workers — are finding it difficult to cover monthly expenses that are rising more quickly than pay. In many cases, the traditional focus on offering a retirement plan and company match is no longer enough, Frost said.
According to Frost and Hauch, personalized benefits for these employees may include:
- Matching contributions for savings that can help pay debt or make a down payment on a house.
- More flexibility in retirement benefits — for instance, by matching employees' student loan payments with employer contributions to a retirement plan.
- Lifestyle spending accounts to provide more flexibility in spending, which WTW found that half of employers are offering or considering doing so by 2025.
- Financial counseling and education.
Leveraging AI and Technology
Technology is allowing employers to offer modernized, personalized benefits more easily than ever before, and emerging artificial intelligence innovations have considerable implications in the total rewards space.
“You can't offer unlimited programs to make everyone happy, so employers are addressing that by using technology powered by data,” Hauch said.
Read: TR is Key to Successfully Integrating AI and Work
This starts with gathering and effectively analyzing employee data to determine which rewards are most prioritized — and to identify pay equity gaps within the company.
“When companies actually do analytics to understand where they have pay gaps, how big the gaps are and the drivers behind them, and put that in front of executives, they'll say, 'I can't ignore that,’” Frost said.
Companies also are building improved interfaces that bring all benefit information into one easily accessible portal, in addition to “gamifying” benefits.
AI is being explored as a tool to personalize total rewards, including through:
- “Smart search” options that combine benefit offerings with related information, chatbots or virtual assistants that help employees navigate personalized benefit details.
- Robust analysis of employee survey responses paired with real-time recommendations.
- Predictive tools to point workers to benefits that best fit them based on their personal data and history.
As AI becomes more commonly used in the total rewards space, employers should consider privacy concerns, bias that may arise from the ordering and context of questions posed to employees, and copyright laws and source citation for information pulled from online sources, Hauch said. And they should avoid fully relying on AI to make decisions about benefits.
“There's still a human factor in AI,” Hauch said. “When you think of things like well-being, you need to infuse that emotive element into what you're getting back from AI.”
The process of modernizing total rewards works best when employee feedback and data are used to point employers in the right direction, Frost said.
“Smart employers modernize benefits because it means they're spending their dollars much more wisely,” he said. “Where do you want to direct your dollars to make sure you're going to deliver what's most relevant to the employees you want to attract and retain?”
Editor’s Note: Additional Content
For more information and resources related to this article see the pages below, which offer quick access to all WorldatWork content on these topics:
