5 minute read 21 Apr 2022

How flexible rewards are playing a key role in employee engagement

By Philippe Cavrenne

EY Belgium People Advisory Services Executive Director

Passionate business partner and solution driven. Prefers meetings to emails. Broad experiences in HR incentives & alternative compensation techniques.

5 minute read 21 Apr 2022
Related topics Workforce

Flexible remuneration systems not only foster internal retention but also help organizations attract the right professionals.

In brief

  • Hybrid working has sparked a renewed interest for a flexible remuneration system.
  • In the war for talent, many organizations are allowing their workforce to be the main architect of their personalized remuneration package. 
  • The successful implementation of a flexible reward system depends on several considerations such as employee autonomy, resourcefulness and maturity.

Compensation and benefits have always been paramount to companies. This specific HR practice manages the most essential organizational asset: human capital.

In many ways, it reflects societal change through its policies and the 21st century certainly hasn’t spared us from that. With the pandemic, such simple questions as “why do we work ?” or “where should we work” accelerated the wave of new ways of working. These have become integral to businesses and HR strategies worldwide.

All industries are invited to rethink their organizational design and working environments to face constant uncertainty and fluctuating market trends. Within this context of highly increased competition, protecting your existing talent and attracting new professionals has never been so challenging. The question that therefore exists is ‘How can a flexible reward system help?’.

Flexibility, as key to employee engagement

HR policies and practices have been thoroughly questioned in the past years. As in many countries, Belgium faced unforeseen issues linked to homeworking when the sanitary crisis occurred. Traditional code of conduct and entire corporate cultures had to be critically reassessed. In certain professions, full-time onsite presence disappeared completely and led to alternate working hours, location and conditions.

Flexibility became key to maintain people engaged and committed. Providing work-from-home equipment, a reliable connectivity, digital communication tools, hybrid schedules – just to name a few – are now part of HR’s ongoing focuses. To be ahead of competition, companies need to actively listen and respond to emerging employee expectations. Translating this into appropriate reward policies is a sign of trust and sustained recognition. According to recent surveys, most workers are ready to leave their employers if post-COVID flexibility is not met.

This context certainly explains a renewed interest for flexible remuneration systems, especially if those are underpinned by strong technology and client-centric platforms.

Work experience enhanced through flexible reward

Belgium is one of the pioneer countries that promoted flexible reward as being beneficial to both the employer and the employee.

Tax efficiency remuneration and a more differentiated approach to the salary package were all elements that made it an attractive system to implement. It’s main selling point was giving more choice to employees when it came to benefits. A choice which could be based on personal preferences and needs. This gradually transformed the system into a retention tool putting the employee work experience at the center of reward.

Today it is also widely used to attract new candidates, especially in the war for talent 2.0. The plans now offer a variety of remuneration components that go beyond basic pay and can be quite creative. We see the rise of more purpose-driven benefits. For example, employees can opt for greener mobility options; invest in charities or climate-change activities; enhance their wellbeing through meditation applications, in-house sports equipment or smartwatches. In sum, your workforce becomes the main architect of its very own and personalized remuneration package.

What to consider prior to implementation

The successful implementation of a flexible reward system depends on several considerations.

To start with, companies need to have the right mindset, culture, and values. Prioritizing the voice of employees is no simple task. It requires a strong relationship of trust, and policies that support inclusivity, mutual respect, and openness to consensus. In unionized environments, this is even more essential as social partners are often involved in the conceptualization of such plans.

Organizations should also be mindful on how to fund flexible remuneration systems in the short to long run. This question is not only linked to financial resource planning but also to the existing workforce. Flexible programs require various degrees of maintenance which correlate with the complexity of benefits offered (and the recurrence of payout cycles). Therefore, HR professionals will have to take on additional responsibilities to support employees with their content, process, and administrative questions. These activities are often outsourced. If not, it’s still crucial to have internal ambassadors of this program who continue monitoring changing employee needs. The variety of benefits granted by the employer will define how closely those ambassadors will have to accompany individuals. Ultimately, the goal is that every employee understands the remuneration elements at his disposal and the choice impact. A good degree of employee autonomy, resourcefulness and maturity are all defining elements for a positive flexible reward experience. 

On the other hand, it’s worthwhile mentioning that Belgium has no clear legal framework to regulate those plans. It’s therefore advised to have the selected benefits analyzed and approved by tax and social experts. Overlooking this part can have serious consequences for the company.

Finally, the implementation of flexible programs means that organizations will need to be cautious with data management and secure reliable IT infrastructures. It goes without saying that any digital ecosystem is only as good as the data that fuels it. Consequently, a most thorough data cleaning process should be put in place to systematically guarantee quality standards. That pre-requisite is central to maintain a good level of trust with employees. Due to high investments in time, money and resources, organizations usually externalize the digital implementation.

Some final thoughts

Current reality is forcing companies to regularly reinvent themselves and face a competition that is fiercer than ever. A recurring response has been to bring the employee at the core of its values and strategy. In return, this challenged old ways of keeping employees engaged and gave flexible reward systems a new purpose. For many organizations, it’s helping them to be closely connected with their people and offer them both a sense of freedom and of belonging they might not have had before. Employees can now build individualized remuneration packages in a way that fits best with their life stages and demographic needs. We have entered a paradigm where it’s no longer work that structures personal agendas but rather the other way around.

Translating this into appropriate compensation & benefit policies does require thoughtful preparation. Nevertheless, those who managed to implement it through strong flexible reward eco-systems are ahead of the game. An engaged and happy employee does not only foster internal retention, but also helps organizations attract the right professionals for them.

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Flexible remuneration systems that fit with employees’ life stages and demographic needs not only foster internal retention but also help organizations attract the right professionals. Making employees the architect of such a flexible reward package benefits the employee engagement tremendously.

About this article

By Philippe Cavrenne

EY Belgium People Advisory Services Executive Director

Passionate business partner and solution driven. Prefers meetings to emails. Broad experiences in HR incentives & alternative compensation techniques.

Related topics Workforce