The Case for Total Rewards

Here's how to minimize employee turnover without increasing compensation and benefits spending.

For employees at most companies, the news on the compensation and benefits front has been pretty dis-mal for the past few years. Signif-icant salary increases have been almost nonexistent, and benefits packages have shrunk as employers, struggling to contain benefit cost increases, have shifted a portion of those expenses to their workforce.

This difficult rewards environment has stretched workers' loyalty to the breaking point, and companies may find themselves facing a wave of turnover as the economy recovers. "Turnover will double this year from 2003," predicts Peter LeBlanc, senior vice president of New York City-based human capital advisory firm Sibson Consulting. "After three years of layoffs, more work for no more money, little or no pay increases, and no bonuses, at some point employees are going to be ready to take their chances with a new employer."

That spells big expenditures for many businesses. Turnover is always costly, but it's particularly expensive when a company loses its most productive employees. And those workers may be the hardest to please in today's environment. In the 2003 Rewards of Work survey of more than 1,000 full-time corporate employees conducted by Sibson Consulting and WorldatWork, respondents who described themselves as high performers rated their company's overall rewards package significantly lower than other employees did.

What can CFOs do to shield their organization from this looming turnover tsunami? The pressure on benefits and compensation costs shows no signs of dissipating soon, so finance executives must ensure that their company gains maximum advantage from every aspect of the rewards it already offers as well as any new ones it may be able to add.

More and more companies are turning to a total rewards approach: They're developing a comprehensive, integrated view of the value proposition they offer their workers, and they're taking action to communicate that value to a restless employee population. A total rewards program helps the organization leverage its human resources expenditures for maximum strategic advantage, and it provides a decisive edge in the battle to attract and retain talent.