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  • Writer's pictureAlfio Bonanno

Reward Management on a Budget: A Guide for Small Businesses

In the current economic climate, small businesses are often caught in the tide of employee turnover. According to a study by Remote, employee turnover rates are expected to surge to an average of 41.4% in 2023 and of . In the UK, the turnover rate was already at 35.6% in 2022. However, the challenge goes beyond these numbers. In June 2022, The CIPD Good Work Index 2022 revealed that more than 6.5 million people in the UK expected to quit their job in the following 12 months. The reasons for leaving were found to be:

  • Better pay and benefits elsewhere (35%)

  • Increase job satisfaction (27%)

  • Better work-life balance (24%)

  • Different type of work (23%)

These figures indicate that while better pay and benefits are significant, they are not the only factors. Many employees are seeking increased job satisfaction, better work-life balance, and a different type of work. This high turnover not only leads to a loss of skills and knowledge but also incurs significant recruitment and training costs, amounting to 34.5% of an employee's salary on average.

Total Reward: Addressing the Multifaceted Needs of Employees

Total reward is a comprehensive approach to employee remuneration that extends beyond just salary. It encapsulates all aspects of the employment relationship that employees value, including monetary compensation, benefits, work-life balance, learning opportunities, and a positive work environment. By understanding and implementing a total reward strategy, businesses can address the multifaceted needs of their employees, thereby creating a more attractive and satisfying work experience. Key to this principle is the relevance that the reward has for the workforce within the organisation and this can vary based on - among other things - different demografics within different organisations.

Crafting a Reward Strategy on a Shoestring

In the face of financial constraints, it's easy to assume that rewarding employees adequately is out of reach. However, a well-thought-out total reward strategy can be the key to unlocking employee motivation and productivity without breaking the bank.

As discussed previously, a total reward strategy is not just about monetary compensation. It encompasses all the benefits, perks, incentives, and recognition that an employer offers to its employees. It's a holistic approach that considers all aspects of an employee's experience in the organization.

The first step in creating a budget-friendly total reward strategy is understanding your employees' needs and aligning them with the organization's goals. This alignment is crucial because it ensures that the rewards offered are not only appreciated by the employees but also contribute to the achievement of the organization's objectives.

Next, consider the relevance of the rewards offered. Not all rewards have to be costly. Sometimes, non-monetary rewards such as recognition, flexible working hours, or opportunities for professional development can be more meaningful to employees than a simple pay raise. The key is to offer rewards that truly resonate with your employees' needs and aspirations.

Moreover, remember that a total reward strategy should be flexible and inclusive. It should cater to the diverse needs of your workforce and be adaptable to changes in the business environment. Regularly gather feedback from your employees and adjust your strategy accordingly to ensure its continued effectiveness.

Finally, communicate your total reward strategy clearly and regularly to your employees. Make sure they understand how their performance is linked to the rewards they receive. This transparency not only helps employees see the value in their contributions but also fosters a culture of trust and mutual respect.

Boosting Employee Retention: The Impact of Reward Strategies

By carefully reviewing their current reward strategies and ensuring they are consistent with the principles of total reward, businesses can enhance employee satisfaction and retention, thereby reducing the costs associated with high turnover.

At EthosHR Consulting, we understand the challenges of reward management. We offer tailored HR services, including reviewing your current reward strategy and discuss options available to you to optimise it! Get in touch today to find out about us, the work we do, and how we can support you.

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