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Building an Agile Rewards Infrastructure

In uncertain times, agility helps HR leaders optimize rewards and boost efficiency

Employers are operating amid tremendous economic and political uncertainty, and managing competing workforce pressures. In a sustained period of high inflation they are seeking to control people costs (for example, of compensation and healthcare benefits) and, at the same time, continue to invest to attract and retain essential talent in a tight labor market.

Among the lessons employers learned in the COVID-19 pandemic is the value of agility. Adopting an agile rewards infrastructure enables HR leaders to navigate through this period of uncertainty while still providing value to current and potential employees. With an agile approach to the tools, people, and processes that make up the rewards engine, HR leaders can improve performance and respond to changing market forces and workforce needs.

Employers can build an agile rewards infrastructure by focusing on three areas: having access to relevant information quickly to inform decision-making, leveraging vendors and technology to create efficiencies that free up staff resources, and individualizing the rewards package.

Accessing relevant information quickly

Information—on prevailing workforce trends, how employees use benefits programs, and vendor performance—is power. Using data and analytics, HR leaders can keep their finger on the pulse of workforce-related shifts and program and vendor performance, and even predict (not just react to) them. They can design and deliver rewards packages that continually meet the needs of employees and the business.

In one example, a global tech company reviewed how employees value their reward packages compared to before the pandemic and detected major shifts. Pre-pandemic, employees most valued compensation and faster career progression while postpandemic, employees prioritized opportunities to save money, take time off from work, and maintain health benefits. They too are affected by high inflation as rising costs challenge their ability to save for retirement. Taking an agile approach, the employer was able to recalibrate its rewards offering to better meet employees’ needs for today.

Beyond postpandemic shifts, employers can track a number of workforce trends and vendor performance metrics to ensure they have the right information for decision-making.

Workforce trends

  • New laws and regulations. Employers need to stay abreast of new laws such as those governing leaves (for example, family leave and long-term disability) and long-term care coverage. Additionally, many states and municipalities are increasing pay transparency by, for example, requiring employers to post compensation ranges in job descriptions.
  • Technology convergence. Employers in every industry are vying for scarce tech talent to support their digitalization strategies. By monitoring expected annual growth rates in tech roles (e.g.,  applications developer and machine learning engineer) employers can anticipate and get ahead of labor market bottlenecks.
  • Globalization 2.0. By carefully monitoring global labor markets, employees can readily adjust location strategies to balance labor cost and quality, detect opportunities in given markets, and identify overheated labor markets to avoid.
  • Flexible work locations. A workforce comprising a mix of in office, hybrid, and fully remote employees is a trend that is likely to become permanent. As such, it requires creative ways to provide new benefits for employees who work from home and other forms of flexibility for those who don’t.
  • Managing human capital. Employers have become more aware of the value of a healthy workforce and its impact on productivity. Employers can incorporate wellbeing into their overall business and workforce strategies to create a culture and environment that maximize both employee health and productivity. 

Vendor performance

Employers rely on vendors to provide health plans, 401k and benefits administration, point solutions to enhance core benefits, and more. As healthcare benefits costs in particular continue to rise, employers can use data to measure the efficiency of their vendors compared to a benchmark or control group.

Instead of having vendors self-report performance using their preferred metrics, as is commonly done today, employers could define the metrics they care most about and require vendors to regularly report on them.

For example, employers can ask health plan vendors to report on employees’ use of office visits to their primary care provider compared to preventive visits, which correlate with better health and lower costs. Employers can also analyze how health plans are performing with high-cost members including those with chronic conditions such as back pain, cancer, and diabetes, or who live in geographies with a high Area Deprivation Index.[1]  By monitoring vendor performance in this way, employers can detect opportunities to boost employee engagement with benefits and improve health outcomes. They can also quickly identify underperforming vendors and take corrective action.

Leveraging Vendors and Technology to Create Efficiencies

Employers can also use vendors strategically to free up capacity internally so that benefits professionals can invest time in efforts that align with the company’s overall business strategy and goals. For example, they could join a pooled employer plan (PEP) to administer 401(k) benefits, freeing up internal resources. For many organizations, PEPs increase internal efficiency and lower risk and costs while delivering top-tier retirement benefits to employees. 

Employers can also adopt new consumer engagement technology that incorporates data on individual employees, such as healthcare claims information, demographics and personal preferences to recommend relevant benefits and services in the moment of need. This type of technology can simplify benefits communication, making it easier to introduce new programs and freeing up staff time spent on crafting, reviewing, and distributing benefits information. It can also increase employee appreciation of benefits by making them personally relevant.

Individualizing the rewards package

Employees expect rewards to go beyond basic protections and show their employer acknowledges their individual needs, commitments, and objectives. Employers can think broadly when designing rewards packages, taking into account the financial, career, physical, social, and emotional needs of their employees. Additionally, 75 percent of respondents to an Aon Employee Experience survey said they want more choice and control over how their benefits dollars are spent.[2] Offering employees a spectrum of rewards options and allowing them to individualize their rewards package helps ensure their needs will be met, and increases their perceived value of it. When companies adopt a more agile rewards infrastructure, they’re able to respond more quickly and effectively to individual needs and provide options. Ultimately, both the employer and the employee benefit.

In a recent, cooperative research effort using a conjoint survey,[3] employee respondents were presented with pairs of rewards packages. In each scenario, respondents were asked which package they valued most. The findings revealed that employees who receive the “right” benefit (i.e., the one they choose) perceive it to be 53 percent more valuable than its actual cost to the employer. (By comparison, employees perceived a “no-choice” option as having the lowest value.) Among the benefit elements included in the survey, the ones with the biggest perceived employee value are:

  • 401K savings
  • Monetary lifestyle allowance for leisure
  • Food subsidies for working from home
  • Monetary health and wellness allowance
  • Paid time off

For an organization with 1,000 employees and $2,500 in benefit investments, the annual ROI of flexible benefits is more than $1,000,000 per year. But what could flexible benefits look like in the context of the modern workforce? For many employers, it’s about taking a more individualized approach to offer options that align with employees’ varied priorities and values, such as climate-friendly investing, wellness spending, or more personalized and culturally-sensitive support. For other employers, it could be about leveraging technology that allows employees to spend their benefit dollars on designated products or services ranging from paid time off and 401K investments to resort vacations and a monthly gym membership.


In an environment marked by high workforce mobility and challenging global uncertainties, HR leaders have a crucial role to play in supporting business growth by attracting and retaining a skilled, diverse, and resilient workforce. Earning a reputation as an employer of choice requires HR leaders to stay informed and respond with agility to prevailing market forces, leverage vendors and technology to free up staff capacity and offer individualized rewards packages in line with employees’ life stages, needs, and values. Those who succeed will activate a virtuous cycle of continually increased performance for their organizations and employees alike. 

[3] Forma and Aon jointly conducted the survey with 381 participants from multiple organizations to better understand total rewards optimization.