What Sets Apart the Traditional Compensation Approach from its Modern Counterpart?

In the past, companies believed that paying employees a good base salary was the main way to keep them happy and working hard. They used to give out yearly raises based on how well people did their jobs. But now, things are changing. Companies are finding that these raises do not make people work harder, and base pay is becoming more like a fixed part of the paycheck, rather than a way to motivate employees.

Employee Expectations Are Changing

When it comes to keeping good employees, it does only involve the usual benefits anymore. Based on a survey many factors affect how long an employee stays committed to their job or employer.

What Makes Employees Stay?

• Flexibility at Work: Employees want the freedom to balance their work and personal lives.
• Meaningful Work: They want to feel that they matter and make a difference.
• Support for Health and Wellness: Employees appreciate it more when their workplace cares about their well-being.

What Makes Employees Leave?

• Lack of Career Growth: When employees feel stuck and see no opportunity for advancement, they are more likely to look for other jobs.
• Not Enough Pay: Fair compensation is crucial. When employees feel they are not being paid what they are worth, they will consider leaving.
• Ineffective Leadership: Leaders who demonstrate a lack of concern for their team members can significantly alienate employees.

While a low salary may push employees out the door, offering modern benefits like flexible work arrangements, support for wellness, and meaningful work can keep them around. It is not only about the paycheck anymore – employees now want a workplace that values their well-being and personal growth more.

The Importance of Total Rewards

Total reward is a term that is getting a lot of attention lately because companies are realizing that just offering pay and benefits is not always enough to keep employees happy. Right now, they are turning to  total rewards.

Total rewards do not only cover regular pay and benefits. In fact, this is the opposite of what is meant by rewards. Pay is something expected for doing a job, but rewards are like a bonus for doing a great job.

Some employees were asked whether they consider their paycheck a reward, and guess what? None of them said they did. That is why when talking about total rewards, it involves adding extra perks and benefits that go beyond just money and traditional benefits.

So, for employers who want to keep their employees happy and motivated, they need to think beyond the usual pay and benefits and consider what other benefits they can offer.

Traditional Benefits versus Non-Traditional Benefits

Both traditional and non-traditional benefits are important for a company to keep its employees happy. But both have their own good sides and bad sides. Dive into each one here.

Why Traditional Benefits Matter

Traditional benefits consist of your salary, health insurance, vacation days, retirement plans, and bonuses. These are the basic foundations of what you get for working. Without them, even when a company offers new benefits, it may not be enough to get people interested in working there.

Nowadays, employees expect a decent salary, health coverage, and enough time off to chill out.

The Downside of Traditional Benefits

But here is the thing: just having the basics is not always enough. Many companies have stepped up their game lately and improved what they offer their employees. Because even when a company has good traditional benefits, it may not stand out from the crowd.

In today's job market, just giving people the basics is not going to cut it. Businesses must strive to enhance their offerings by providing additional benefits as well.

Why Non-Traditional Benefits Are Important

Non-traditional benefits are the newer, more modern perks. Flexible working hours, unlimited vacation days, shout-outs for good work, help with commuting, wellness programs, childcare, and special spending accounts are all examples of this.

Most people really like these kinds of perks. Surveys show that most employees think they boost morale, help keep people on the team, and make the company a better place to work.

These benefits go beyond what employees expect, making them feel appreciated and valued. And that leads to them working better, sticking around longer, and being happier.

The Downside of Non-Traditional Benefits

These new perks are not enough on their own. Employees need the basics such as good pay and insurance benefits.

General Employee Expectations

Different generations have different priorities when it comes to work. Baby boomers and Gen X folks care a lot about salary, health insurance, retirement plans, and having a good balance between work and life.

But Millennials, who make up a big chunk of the workforce, want something more. They are all about having the freedom to do their work their way, flexible schedules, a good balance between work and life, and being able to choose the benefits they want.

Then there is Gen Z, the youngest group. They are into having employers who pay attention to them, working in a positive environment, getting paid well, and having the option to work flexible hours.

What people want from their jobs is changing. And as the older folks retire, these expectations will keep on evolving. Having a good balance between work and life, flexibility in how they work, being able to choose what benefits they get, and having a great company culture will become even more important.

Compensation, perks, and total rewards are important for getting and keeping top-notch employees. Good salaries, health coverage, and bonuses are a must-have, but companies need to step up their game and offer better benefits for the younger generation joining the workforce. That means more flexibility, more freedom, and more praise for hard work.