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Attraction and Retention vs. Cost Containment

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Deloitte and ISCEBS (International Society of Certified Employee Benefit Specialists) recently pushed out their annual list of top 5 total rewards priorities for 2006Deloitte, 2006. “Top Five Total Rewards Priorities for 2006.” Retrieved from on January 31, 2006.. The group of individuals surveyed was ISCEBS members and Deloitte clients. Remember that the results are not overall HR priorities, but total rewards priorities as identified by people who are generally benefits practitioners (and some compensation people).

I’m actually a fairly strong proponent of the idea that cost containment and creating reward programs that attract candidates are not oppositional forces. Unless your rewards program is incredibly well optimized, chances are that you can save huge amounts of money while creating better incentives at the same time. Most of us intuitively know that our organizations don’t really reward our best performers, and we also don’t really penalize our worst. Except for sales incentives, bonuses for us mere mortals probably vary by a couple percentage points one way or another. By truly creating incentives that reward top performers (and reward them well), AND by creating a non-incentive for poor performers, you’ll probably find you’re saving money once yo do the financial calculations. Additionally, once the poor performers figure out what you’ve done, they will either shape up or ship out. Lastly, your top performers will be all the more pleased about their situation.

Now here’s the Deloitte study:


Attraction and Retention versus Cost Containment
While controlling the cost of health care benefits has been survey respondents’ number one priority for almost a decade, a new concern emerged in last year’s Top Five Total Rewards Priorities Survey: the tension between cost containment, on the one hand, and the attraction and retention of employees, on the other. This year’s survey provides evidence that this tension is increasing. Providing rewards programs that attract, motivate, and retain talent is the number two priority this year, as it was in 2005. At the same time, the percentage of respondents who listed this priority is up markedly, from 56 percent last year to 69 percent in 2006.

This tension is also reflected in the survey findings on the actions benefit professionals are taking or planning to take. For example, 72 percent are redesigning their compensation plans, with the primary focus on variable cash, cited by 53 percent of those making changes. Of those making or planning changes, 55 percent say their number one priority is improving employee attraction/motivation/retention.

More than half of the respondents (51 percent) have recently redesigned their retirement programs or plan to do so. These benefit professionals split almost evenly between those whose number one priority is reducing costs (39 percent) and those whose goal is improving employee attraction/motivation/retention (34 percent).Ibid

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2 responses to “Attraction and Retention vs. Cost Containment”

  1. […] SystematicHR looks at a Deloitte study listing the top 5 rewards priorities for benefits practitioners. Health benefits top the list as they have for the past decade, but attracting, retaining and motivating employees is second. […]

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