THE FUTURE OF PAY

ENABLING
WORKPLACE CHANGE
THROUGH REWARDS
Organizations that reimagine how they deploy, reward
and listen to their people will be ready for the future

Reshape and Optimize

Your Workforce for the Future
 Executive Summary · Enabling Workplace Change Through Rewards

EXECUTIVE
SUMMARY
What people need and
want from their
employers is changing.
Organizations that
reimagine rewards in
the changing context
will be able to maximize
their investment and
reshape their workforce
for the future.

Total rewards programs need to be revamped in order to

address a post-pandemic world and changing employee
expectations. A successful rewards program will help
build a resilient workforce by encouraging the right
behaviors, driving performance outcomes and uniting
a workforce by focusing people in a common purpose to
deliver on the business’s mission. This paper provides a
roadmap for realizing the full potential of total rewards.

02
 Introduction · Enabling Workplace Change Through Rewards

Organizations need to reshape and optimize

their workforces for the future

Nearly everything about As companies face challenges and difficult

the way people work is choices, business leaders must take advantage
changing. Planning for the of the opportunity to fully reimagine their
future requires organizations rewards strategies. With the workforce
to build agility and resilience change that is certain to continue, an
among their workforces. effective total rewards strategy needs to:
We believe there are four
issues that firms should • Align to organizational performance (but also
prioritize that to help them provide a threshold level of benefits’ protection);
future-proof their business
by leveraging their greatest asset — their people. In • Afford greater flexibility for a diverse talent base;
our Future of Work series, we explore the future of
pay, where and how people will work, future skills • Support various working models in
and diversity, equity and inclusion (DEI). Within the move to an agile workforce;
each of these issues, we present a framework for
addressing meaningful and lasting change. • Be grounded in compliant
and fair standards; and
However, the work does not end there, as none
of these issues have an end date. Through Aon’s • Differentiate and provide a
Accelerate Model organizations can apply insights competitive advantage.
around rewards, future skills, where and how people
work and DEI through a data-driven approach, In this paper, we explore why businesses need
allowing them to continually assess opportunities for a fresh approach to their rewards structures
action with speed and scale. It is through this lens and how to design them in order to answer
that adjusting to constant change in the workplace today’s compensation challenges.
— no matter your firm’s unique profile — is possible.
With many firms starting on their journey to
The purpose and possibilities of an reimagine rewards in a post‑COVID-19 era,
effective rewards strategy we know change is only beginning.
Reshaping the workforce is a top priority for
organizations across geographies and industries, Brooke Green
as the COVID-19 pandemic accelerates workforce Partner, Employee Rewards Leader
changes that had already been underway. Consider at Aon’s Human Capital Solutions
how quickly the business world has changed
since the beginning of 2020. Remote working
has become widespread. Unemployment shot
up in some industries while others experienced
high demand as a result of the pandemic. The
scope of essential workers expanded and, as
schools moved online, employees began asking
more questions about their childcare benefits and
looking for flexibility in their work schedules.

03
 Introduction · Enabling Workplace Change Through Rewards

Reimagining rewards
will influence a variety of
related human capital issues.
Topics in blue are the biggest areas that will be influenced.

Digital Talent
readiness assessment
& future & selection
skills
Talent Pay equity
development and DE&I
& mobility analytics

Job Aligning
architecture Total
& career Rewards to rewards
navigation Changing Needs

Performance
& Competitive
productivity pay
Workforce
planning Pay for
& location performance
analysis

04
 Table of Contents · Enabling Workplace Change Through Rewards

CONTENTS Reshape Your Rewards Approach

for a Changing Workforce
Recent events have provided catalysts to modernizing rewards schemes 06

Diverse Working Models

Accelerate Rewards Change
Using rewards to enhance and drive the employee experience 12

Rewards Must Be Designed

To Attract Future Skills
Determining the best way to hire and reward employees 18

Delivering on Employee Expectations

of Rewards
Ensure rewards are delivering on their purpose 24

References and Resources 30

05
 Reshape Your Rewards Approach for a Changing Workforce

Reshape your
rewards approach for
a changing workforce

Recent events have provided catalysts to modernizing rewards

schemes. These include an increase in remote working, competition
for future skills and a greater demand for flexibility and choice.

Organizations should reimagine their rewards
systems against this backdrop with three core
principles in mind: agility, simplicity and transparency.
While we have been advocating these principles
for a while, they are particularly relevant in the
current environment. Using these as a guidepost
will deliver a program that is more resilient to
disruption in whatever form it may take.
Many organizations have not reviewed their rewards
approach since the end of the last big, global
recession in 2008–09. Until recently, rewards programs
were often viewed by business and HR leaders as fairly
static, requiring occasional modifications to different
components, but rarely a rethink of the entire system.
Today, rewards represent an important part of a
Future of Work toolkit that can help drive change.

Definition of total rewards

Organizations and their employees do not always have a consistent definition of what constitutes
‘total rewards’. In our surveys on the topic, we have found broad agreement that total rewards include
compensation, health and benefits. The definition gets more complicated when factoring in ‘softer’ benefits,
such as workplace environment, flexible working schedules and learning and development programs. To
accommodate for these differences, we generally define ‘total rewards’ as everything an employee gets
and perceives as valuable or rewarding.

07
 Reshape Your Rewards Approach for a Changing Workforce

Employers will have different rewards’ needs through
their stages of maturity. While we encourage firms to
take a holistic approach in reshaping their rewards
in light of workforce change, it is important to
keep in mind what is realistic and necessary given
where an organization is within its life cycle.
The COVID-19 pandemic has brought to the surface
some of the chasms between what employees want
and need from their employers and what they are
currently receiving. We see this in the desire for
health and wellness policies – from financial security
and mental health protection to career pathing that
accommodates non-traditional career moves and
incentive plans with understandable and realistic
goals. In times of uncertainty, employees are more
likely to seek out stable employment. To that
end, organizations that provide a level of security
in industries that have remained stable or even
thrived during the pandemic are attracting talent.
However, when we surveyed over 2,000 US workers
in the early days of the pandemic, employees that
said their company proactively communicates HR
issues also reported a higher level of trust in their
employer. Similarly, Aon’s Rising Resilient report
found that employers who do more for the health
and well-being of their staff were more likely to
have taken quicker and more meaningful actions to
ensure the safety and well-being of their workforce
during the early weeks of the COVID-19 pandemic.

Aon Rewards Maturity Model:

Different rewards’ needs at different company life stages
Start-Up Development Acquisition Private Growth Maturity
Phase Merger Ready to Public Phase Phase
Market reference Key hire sign-on Short-term Governance Revise Benchmark total
points packages incentive review compensation rewards
philosophy
Initial Executive Disclosure Optimize
broad-based compensation preparation Build new salary rewards
benchmarking review structures
Build career
Assessment of Equity retention Re-balance pay framework
cash and equity analysis mixes
Job architecture
programs
Company
Salary structure Transition
design Strategy
Equity guideline
development

Reward distinctions

As we dig further into the topic of total rewards, it is important to make clear certain distinctions.
In this paper, we are focusing primarily on employee rewards and total rewards. While some of these
issues are applicable to executive compensation, we are not touching on the unique factors that influence
executive pay (including details around long-term incentive plan design and payouts, investor and
proxy advisory firm voting policies, as well as other governance considerations). To learn more about
our executive compensation services please visit rewards.aon.com/executive-compensation

08
 Reshape Your Rewards Approach for a Changing Workforce

Employers offer more

than employees realize.
Employers

87%
offer initiatives
82%
offer initiatives
88%
offer initiatives
focused on focused on focused on
healthy living emotional wellbeing flexible work and
skill development

Employees

43%
believe no initiatives
44%
believe no initiatives
39%
believe no initiatives
focused on focused on focused on
healthy living emotional wellbeing flexible work and
are available are available skill development
are available

09
 Reshape Your Rewards Approach for a Changing Workforce
Consider how the following trends
have influenced what workers want
from rewards and how employers
are addressing those needs:
• Remote working: This trend is the single
largest disruptor of the workforce in 2020.
It has led to a diverse range of working
models and responses by organizations. The
implications of a larger remote workforce
are vast when it comes to rewards — from
geographic pay differentials to improving the
employee experience in a virtual environment.
• Rise of the gig economy: With more contract
and part-time workers, the percentage of
on-site, full-time employees that are on the
corporate payroll is shrinking. Questions are
already being raised among legislators on
the protections contract gig workers should
receive. Companies are expanding their
definition of an employee to make it broader.
The pandemic has accelerated this change
and has made it a higher-profile issue.
• Greater focus on pay equity: Pay equity has
become a higher priority at organizations across
the globe following widespread legislation,
investor scrutiny and demands from internal
stakeholders. It is much more common for
organizations to conduct regular pay equity
analyses and audits, as well as ensure fairness and
transparency are lived principles followed within
a firm’s compensation policies and practices.
• Meeting the needs of a multigenerational
workforce: With a more dispersed,
multigenerational workforce, employers need
to better understand what their workers value
in their rewards and determine areas with
potential for customization. For example, some
firms now allow equity-eligible employees to
choose their preferred mix of stock options
(which have more inherent risk and could be
attractive to younger employees) and restricted
stock (which is treated more like cash).
10
• Delayed or phased-in retirement: Aon’s
research in North America found that only one
in three workers will have saved enough to retire
comfortably by age 67. Aon’s research in UK
found that one in four workers think they will
never be able to retire. It also found that many
employees are putting off retirement to work
part time before fully exiting the workforce. With
increasing recognition from employers that those
over traditional retirement age still have a lot to
offer but also present a greater flight risk, rewards
customization for this group is important.
• Purpose-driven employees: In the past
decade, various surveys have found that
more workers are motivated by working
in a job and for an organization that is
purpose-driven. The employee experience
and employer brand are inextricably linked
these days. ‘Delivering clarity and purpose’ is
one of the 10 factors identified in the Rising
Resilient report as underpinning workforce
resilience. While pay is important to employees,
companies must look at the bigger employee
value proposition in order to stand out.
• Rapid evolution of future skills: As technology
spreads and businesses find themselves
competing across industries for similar skills,
there are divergent practices on how to
align pay to attract and retain employees
with future-leading skills. Determining the
best way to use rewards to drive these
goals is a matter of urgent debate.
11
 Diverse Working Models Accelerate Rewards Change
Diverse working
models accelerate
rewards change
With more diverse working models at play (e.g., fully remote
working, hybrid models, flexible schedules), organizations should
use rewards to enhance and drive the employee experience.
The increase in employees working remotely
has a significant impact on rewards programs.
As companies spent years building an enhanced
in‑person working environment, many of those
efforts were erased almost overnight. The one-
upmanship that occurred among many Silicon
Valley tech firms for best office perks matters little to
employees who are not in the office or where offices
are reconverted from open, collaborative spaces back
to closed areas to accommodate the pandemic.
As global lockdowns hit in the early spring of
2020, many organizations quickly diverted funds
to aid employees in setting up home offices or
boosting their morale and mental well-being
through various programs, such as meal delivery,
childcare services and providing more flexibility
in their workday. As more employees settle into
a new normal of continuing to work remotely
or a hybrid schedule, it is time for businesses to
evaluate their rewards programs for the long term.
Diverting office perks for a remote setting may be
one of the easier actions to take. Ensuring managers
are trained to lead remote teams and performance
management systems and onboarding programs are
set up for the new working environment are likely to
be more difficult. The bottom line: firms must ensure
that employees who continue working remotely
or in a hybrid capacity do not get left behind.
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 Diverse Working Models Accelerate Rewards Change

Providing more opportunities for employees to
take on new skills and roles (i.e. job mobility)
is one way to ensure all employees, including
non‑traditional workers and remote employees,
have opportunities to grow in their career without
leaving the firm. This will reduce attrition rates and
maximize organizations’ investments in their people.
In recent years, we have seen an increase in lateral job
changes, as employees desire new opportunities to
grow their skillset without needing to move up the
corporate ladder. Some companies are even beginning
to recognize these moves as promotions rather than
lateral transfers. Out of 645 global respondents to an
Aon survey in December 2020, 45% gave employees
the opportunity to move into a new role that was
at a similar job level and a pay increase that was
equal to or smaller than a promotional pay increase
(the remainder provided no pay increase). At the
same time, organizations should be careful not to
award pay increases for all lateral movements or they
could have internal pay equity issues. Pay equity
legislation limits the ability to pay very different
amounts for roles that are at the same grade or level.

“Policies that enable job mobility allow employees to grow in

their career without becoming a flight risk. As certain job roles
become automated and outdated, job mobility programs will
ensure employees can be upskilled into new, relevant roles.”

Marinus van Driel, Associate Partner, Aon’s Human Capital Solutions

New approaches to lateral job moves

upend the traditional career ladder
TODAY THE FUTURE

Climb Y Career Career Career Open

the Ladder Ladder Paths Maps Patterns Market
One-dimensional One- or two- Progression Progress Grouping of roles Movement
upward dimensional within within and that encourage throughout the
progression managerial a function across career movements organization
or technical functions across functions driven by the
progression to build depth employee
and breadth

14
 Case Study · Enabling Workplace Change Through Rewards

Tailoring rewards for

employee expectations
to improve retention
A new compensation plan was preferred by employees
without any additional cost to the client.

20%
lower employee turnover by introducing the new plan.

A telecommunications firm in Asia had allowances or cash benefits were prevalent

operations in one country where employees
were on a fixed-term contracting model. As
such, workers would want to leave once their
contracts expired or even before the end of
their term. High turnover made it difficult
to build upon these employees’ good work
and meet the company’s aggressive growth
plans. Aon partnered with the client to
study the unique compensation structures
in the country and better understand which
as well as tax efficient. The firm also surveyed
their employees to better understand what
was causing some to leave prematurely and
what kind of compensation plans they would
find more motivating. The exercise allowed
our client to introduce a new plan that
employees preferred without an additional
cost to the company. As a result, employee
turnover — and those costs associated with
replacing workers — were greatly reduced.

15
 Diverse Working Models Accelerate Rewards Change

Revisiting geographic
pay differentials
due to remote working
When an employee working remotely decides to move locations,
should employers adjust their pay based on the new location?
More than one-third (36%) are addressing this question
on a case-by-case basis. The same percentage (36%) of
firms have adjusted (or are considering adjusting) their
geographic pay differentials since the start of the pandemic.
The changes they are making run the spectrum.

54%
have, or are
43%
have, or are
36%
have, or are
considering, considering, considering,
adding more broadening narrowing
geographic zones their zones their zones

With these types of situations arising more frequently,

we encourage organizations to spend time on a comprehensive,
well-communicated policy. However, there is more consensus on
the need to re-examine geographic differentials with new market
data — with 85% of firms saying they are undertaking this review.

Source: Aon COVID-19 HR Pulse Survey #6, December 2020, with responses from 1,484 organizations

16
 Diverse Working Models Accelerate Rewards Change
Remote Working Provides
New Opportunities To Source
Talent Far and Wide
With more remote workers, employers are revisiting
their approach to location-based pay and whether
they need to double down on making sure the cost
of living and cost of labor are reflected in how their
staff are paid. At the same time, some employers
are also asking whether location matters less now
that so many employees are planning to continue
working remotely. Some country governments, such
as Ireland, are ensuring the choice of where to work
lies with the employee and employers must comply.
In the latter scenario, a decentralized compensation
scheme focused on merit- and skills-based pay is the
focus. In the former scenario, an employer might
place more value on a sense of fairness and structure.
However, the debate is more nuanced than one
path versus another. In reality, most organizations
are trying to balance both. They want merit-
based pay that is easy to administer given an
environment of more remote, mobile employees.
They also want to ensure pay equity is preserved
and that there is a unified approach to handling
location‑based pay. Taking an uneven approach
to adjusting compensation for remote employees
that move compared to employees hired in a
physical office can create systemic inequities in
pay. Creating a unified approach to location-
based pay that applies to all types of workers (e.g.
remote, on-site, non-traditional) will be a top
priority in the future of work. This approach should
balance the three principles of an effective rewards
program: agility, simplicity and transparency.
We should note that geographic pay differentials are
a bigger debate in North America compared to other
regions. In particular, many companies throughout
Europe have developed a single set of ranges in their
country that are broad enough to capture differentials
but narrow enough to control salary creep.
The question of location-based pay depends
upon the size and difference in cost of labor
throughout a particular country or region where
a company is hiring talent. In China, cities are
generally classified into three tiers, with tier-one
cities paying the highest. Our data finds that pay
differentials for tier-two cities as a percent of the
average of tier-one cities varies depending on
the city and industry. Meanwhile, in Germany,
our compensation data has found a 16% swing
between Munich and Berlin for technology jobs.
Intercountry nuances underscore the need to
apply a consistent policy across borders but tailor
it to the data available in the specific market.
There is also the added complexity of employees
moving across borders and not just within. This is
happening more often in the European Union where
free movement of people is possible. Organizations
face pay-related questions in these situations,
including analyzing cost of living, market pay, tax
and accounting-related laws in local jurisdictions.
Creating a unified
approach to location‑based
pay that applies to all
types of workers will
be a top priority in
the future of work.
17
 Rewards Must be Designed to Attract Future Skills

Rewards
must be designed to
attract future skills

Determining the best way to hire and reward employees with

future-leading skills is urgently top of the agenda for organizations
as they reshape and optimize their workforces for the future.

Organizations tend to have rewards aligned to
current and past business models, even while
driving a big-change process (e.g. digitizing the
business model). Therefore, rewards must be
redesigned so as to not overvalue old roles or
skillsets and undervalue those skills driving the
success of the aspired business model of the future.
There are multiple ways to reward future
skills. We have outlined three primary ways to
reward future skills aligned to the timeframes
of finding, assessing and retaining or
upskilling existing talent with future skills.

58%
Organizations’ investment priorities
Over half (58%) of organizations we surveyed are identifying future
skills gaps, while 51% are investing in career paths and/or job leveling.

Source: Aon COVID-19 HR Pulse Survey #6, December 2020, with responses from 1,484 organizations

19
 Rewards Must be Designed to Attract Future Skills

Short term: premiums for scarce skills
There are numerous pros and cons to paying a
bonus or salary premium to employees or job
candidates with in-demand skills. On one hand,
with digitization strategies being a top priority
across industries, many organizations outside of
the technology sector are competing for new types
of job roles and skills. Firms that offer a skills-based
premium may have a leg up on the competition.
Before determining if a skill’s premium is necessary,
companies need to assess the gap between current
skills within the organization, future skills that are
needed and which workers can be upskilled to
bridge that gap versus those hired from outside
the organization. Using market and benchmarking
intelligence, future skills in terms of roles and mindset
can be defined and act as a critical component in
future-proofing the workforce and informing rewards.

On the other hand, paying a premium for skills that

will later become ubiquitous or obsolete is a real
concern. Additionally, paying a premium for hot
skills has the potential for creating or worsening Companies need to
pay equity gaps through rewarding certain skills
without paying attention to salary structures, job assess the gap between
leveling and other mechanisms meant to bring current skills within
structure and fairness to compensation decisions.
There are also situations where an employer may
the organization, future
still be paying a premium for skills the employee skills that are needed and
no longer uses in their current role or for a skill which workers can be
that is now widely held among similar job roles.
upskilled to bridge that gap
Therefore, setting parameters for the premium versus those hired from
is important. If a firm can ensure that they also
hire for adaptability, learnability and curiosity
outside the organization.
(in addition to whatever hot skills they need),
that talent will be able to reskill, redeploy and
continue to grow and add value – even if the
particular hard skills have become obsolete.

Pay gap multiples inhibit development of future skills in Asia

“One of the biggest challenges for rewards in Asia is unsustainably
high pay gaps between senior leaders and entry-level positions.
This dynamic stands in the way of attracting new talent with
future skills into an organization. On a positive note, we are
starting to see signs that this multiple is decreasing, partly driven
by the move to remote working and a more fluid talent pool.”

Alexander Krasavin, Partner, Regional Commercial Head APAC, Aon’s Human Capital Solutions

20
 Case Study · Enabling Workplace Change Through Rewards

Assessments
to understand
the best fit with
future skills at Siemens
Reshaping the workforce for the future.

50% of all
employees
will need reskilling by 2025 as the adoption of technology increases.
Source: World Economic Forum, The Future of Jobs Report 2020

Siemens knows that skills needed in the
future are scarce in the external hiring market
and that the firm faces stiff competition
for talent from cross-industry competitors.
However, it recognizes the strength and
power of its current internal talent and
its ability to pivot to acquire new skills.
Siemens worked with Aon to bring together
a new combination of fully mobile-enabled
assessments of vocational interests and
abilities, attitudes, learning styles and
cognitive abilities as well as an indicator of
‘willingness to change’. The results from these
assessments, together with the biographical
information, pass through Aon’s complex
matching algorithm. Once completed, the
employee receives a report highlighting the
top three best matches between their own
interests and those identified as a future
skill by Siemens. It also offers development
action suggestions and ideas to acquire
new skills. Armed with these top three
suggestions, the employee is then able to
request an in-depth feedback session with
one of the Siemens Professional Education
team members. From there, they may apply
to join one of the 30 reskilling routes the
firm has researched, sourced and will fund
– ultimately closing the future skills gap.
Read more here.

21
 Rewards Must be Designed to Attract Future Skills
Medium term: future skills roles
In the short and medium terms, organizations can
use Aon’s future skills framework to understand
their current future skills profiles, how this
compares with peers and what the opportunities
are for reskilling and skill mobility in the future.
Examining future skills consists of several steps.
Firstly, understand the gap. This entails looking at
the future skills prevalence in the market. Secondly,
once the skill prevalence for each role has been
identified, an organization can understand the
internal value and compare the roles with highest
future skills prevalence with external benchmarking.
This will help to identify flight risk of future crucial
talent. Thirdly, develop a strategy to close the gap.
Closing the gap involves understanding where
the right talent may be located for external hires,
quantifying the potential for internal redeployment
and identifying any future skills pay gap. Competitive
benchmarking and adding retention-based pay for
key roles and high-impact employees is also investing
in future skills. Employees that make outsized
contributions to the business are more likely to be
more agile and adaptable to learning new skills.
Competitive
benchmarking and adding
retention-based pay for
key roles and high‑impact
employees is also
investing in future skills.
“We hire ninjas and find the best role for them within the company.”
22
Longer term: hire and retain for
mindset and train for skills
Job architecture and salary structures have a
strong role to play in ensuring a company hires,
retains and reskills employees with future skills.
However, screening for competencies, behaviors
and values may be even more critical in the long
term. Companies need to assess future skills that
are needed in their organization to meet strategic
growth goals, determine what skills they have
among their current workforce and evaluate which
employees can be reskilled into new roles as well
as how easy those skills will be to learn. Employees
and job candidates should be assessed for their
mindset and ‘softer’ skill set (e.g. agility, ability to
learn, curiosity, digital leadership) just as much,
if not more so, than technical ‘hard’ skills.
Companies need a compensation system that
recognizes performance, encourages acquiring
new skills for personal development as well as
meeting the business’s changing needs of the
business and reflecting the specific needs of
different lifestyle choices within the workforce.
Large, US-based technology client
23
 Delivering on Employee Expectations of Rewards

Delivering on
employee expectations
of rewards

The biggest expense for a business is its people. Optimize

rewards and ensure they are delivering on their purpose.

Rewards are most effective when the design and
messaging is aligned with employee priorities. Since
not everybody wants or values the same thing, data
must be leveraged to inform rewards customization.
Few organizations can afford to provide a superior
rewards experience on all levels. In order to maximize
the ROI of your rewards spend, a total rewards
strategy needs to incorporate employees’ preferences.
While traditional approaches to rewards
customization have tended to group
employees by generation, current thinking
has evolved. Research has found preferences
do not vary as much by age and are more
accurately grouped by surveying employees’
preferences and categorizing their lifestyles.

“Brand values have become very important in recent years.

What a company is really good at and the personality it has
or wants to show really needs to influence and shape the
nature of the reward strategy for that organization.”

Stuart Hyland,
Associate Partner and Head of Employee Rewards in Europe, Aon’s Human Capital Solutions

25
 Case Study · Enabling Workplace Change Through Rewards

A large tech firm

focuses on
tenured employees
to slow attrition
Refining communication strategies for rewards.

Cost savings were found through changes to stock ownership

and retirement plans and career paths.

A large, US-based technology firm struggled
with low employee engagement and high
turnover. The firm’s reputation was helping
attract talent, but the work environment
was driving turnover. Aon took a closer look
at internal data to identify existing lifestyle
types within the new-hire population.
Each had very different career, learning
and rewards preferences. Aon also learned
that tenured employees had very different
needs and preferences than new hires.
The client refined its internal and external
communications strategy for rewards and
took specific action to benefit engagement
and retention of incumbent employees
across different lifestyle groups. Cost‑saving
opportunities were found with stock
ownership plans, retirement savings, the
work environment (most employees valued
autonomy) and career paths (faster career
progression during early employment).

26
 Delivering on Employee Expectations of Rewards

Reimagining total rewards strategies requires us
to address not just the financial and professional
needs of employees, but also physical, social and
emotional well-being. Investing in meaningful and
holistic total rewards programs will make an agile,
resilient and diverse workforce of the future a reality.
As organizations reimagine their rewards for a future
way of working, they know they cannot afford to
do it all. This is why optimizing total rewards is
so important. Making tough choices should be
done through the lens of the three principles of
reward: agility, simplicity and transparency.

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an ys
n
Fi Financial Healthy

ica
security behaviors

l
Rewards & Physical
recognition
nister Com health
i
m
m
Ad

un
icate

Holistics
Inclusivity Clarity &
& equity Total purpose
Rewards
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De

S o ci
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Care

s ig

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Adaptable Me Connection
skills
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Emotional Resilience
fitness

E m ot io n a l

27
 Delivering on Employee Expectations of Rewards
Here are some core questions to ask
that relate back to these principles:
1. Agile rewards will, in turn, support an agile
and resilient workforce. By June 2020, 90%
of organizations said they have, or are actively
considering having, flexible compensation programs
to build and maintain an agile workforce.1
To embrace agility, firms should be asking:
• What level of flexibility will be optimal
for the organization so that rewards
can be delivered effectively?
• How can rewards scale as the organization grows?
• What factors should be considered
for personalizing pay?
• How do we optimize pay structures for different
working models while catering to individual needs?
• Should pay be adjusted when a
remote worker moves locations?
2. Simplify rewards for new ways and definitions
of working. Firms are quickly realizing that, if
they are to sustain and thrive in the future, they
must adapt to different working models.
To embrace simplicity, firms should:
• Ensure the compensation philosophy
speaks to a diverse workforce.
• Build resilience and agility in the pay design
for different working models and workers.
• Determine optimal pay structures that
will facilitate ease of movement between
working models and worker types.
• Define and benchmark the market value of jobs,
skills and individuals while meeting worker needs.
• Ensure the desired level of pay equity is
maintained proactively rather than corrected
annually.
1
Source: Aon COVID-19 HR Pulse Survey #4, June 2020, with responses from 1,940 organizations
28
3. Make changes to rewards and communicate
these transparently and with employees’
preferences in mind. There is a growing focus
on providing better total rewards packages
overall, not just in cash. The pandemic exposed
some of the shortfalls in companies’ health and
benefits policies, such as inadequate sick leave
or lack of mental health benefits. Workers are
demanding more transparency in how their pay is
determined and what is included in total rewards.
To embrace transparency, firms should ask:
• How can we deliver fairness in our
rewards programs across different worker
types and models while enhancing
the attractiveness of plans?
• How can the pay structure deliver maximum
value to both the organization and the worker?
• How can organizations and employees co-create
and share value for the near and long term?
• How can we increase efficacy of the total
pay package for an individual worker with
preferences across cash and benefits?
• What financial well-being programs should
we offer to support employees in using
and valuing the rewards on offer?
“With our best-in-class
workforce data and industry
expertise, we are dedicated to
helping our clients navigate
whatever obstacles lie ahead.
The time is now to reimagine
how your rewards can help
reshape your workforce
for a better future.”
David Knopping,
President of Rewards,
Aon’s Human Capital Solutions
 Case Study · Enabling Workplace Change Through Rewards

Driving
employee experience
through simplicity
in rewards design

48
Pages
1
Page

Effective incentive plans are easily understood and motivating.

Embracing agility, simplicity and
transparency in your rewards programs
means employees need to understand how
their goals directly relate to pay outcomes.
Aon worked with a UK-headquartered
client that had a 48-page sales incentive
program written with legal and technical
jargon. The plan was difficult for sales
staff to understand. While headquarters
thought they had a single global sales
scheme, every region and country actually
did its own thing with no consistency. This
resulted in inconsistent outcomes around
the world. In more than one instance,
over 50 employees would claim some
form of credit on a single sale, dramatically
reducing the firm’s profit margin.
We worked with the client to streamline and
simplify the plan so that it was understood
and applicable to a global sales force (and
fitted on a single page). Following the
rollout, the client saw the benefits of an
aligned and consistent scheme in terms
of performance and behavior outcomes
that they were better able to budget for.

29
 References and Resources

References
and resources

For more information on the topics discussed in this paper, please see these references:

• Reimagining total rewards for a changing world

• European life sciences firms address pay implications of cross-border talent

• Retailers need to build workforce agility to reshape for the future

• As European technology firms consider a more virtual workforce,

they must decide how location factors into pay

• To create a win-win total rewards strategy, start by understanding employee preferences

• The physiological repercussions of coronavirus on home workers

• Creating a culture of lifelong learning without a ‘job for life’

• Gig economy – Financial security or greater control?

• Stepping back, or stepping up? Getting the right financial support to employee

• Delivering excellence by aligning organizational purpose with employee values and aspirations

• Building a future-ready business alongside your employees

• Keeping on track in challenging times: Aon’s DC pension and financial wellbeing employee research 2021

30
 Enabling Workplace Change Through Rewards

“With our best-in-class

workforce data and
industry expertise, we are
dedicated to helping our
clients navigate whatever
obstacles lie ahead.
The time is now to
reimagine how your
rewards can help reshape
your workforce
for a better future.”
David Knopping,
President of Rewards, Aon’s Human Capital Solutions

31
Contact
To learn more about Aon’s
Human Capital Solutions, visit us at:
humancapital.aon.com

Or contact us at:
humancapital.aon.com/contact-us

About Aon
Aon plc (NYSE:AON) is a leading global
professional services firm providing a broad range
of risk, retirement and health solutions. Our
50,000 colleagues in 120 countries empower
results for clients by using proprietary data and
analytics to deliver insights that reduce volatility
and improve performance.

About Human Capital Solutions

Aon’s Human Capital business provides
leaders with a powerful mix of data, analytics
and advice to help them make better
workforce decisions. Our team, spanning
2,000 colleagues in more than 30 countries,
includes the firm’s rewards, talent assessment
and performance and analytics practices.

© Aon plc 2021. All rights reserved.

The information contained herein and the statements expressed
are of a general nature and are not intended to address the
circumstances of any particular individual or entity. Although we
endeavor to provide accurate and timely information and use
sources we consider reliable, there can be no guarantee that
such information is accurate as of the date it is received or that it
will continue to be accurate in the future. No one should act on
such information without appropriate professional advice after a
thorough examination of the particular situation.

C1310US 04.21