better & Co.

Redefining Reward Strategy: A Customized Approach to Enhance Employee Wellbeing and Business Competitiveness

Author: Alinne Rosida Djumhana, Rifki, Iyan Muhsinin

Reward Strategy is a crucial element of company culture and competitiveness in winning the best talent. However, in practice, there are two factors that hinder the implementation of reward strategies, especially in Indonesia. Firstly, reward strategies often revolve around following market salary surveys, which is not strategic as it does not differentiate from competitors. Secondly, rewards are often one size fits all, which results in high waste costs and a lack of unique experiences for employees in the personalized world today. 

To address this, we developed a Reward Optimization methodology that adapts marketing approaches to improve the employee experience and wellbeing through mass customization of the reward strategy. We implemented this methodology to optimize the reward strategy for talent and midlevel employees in one of manufacturing companies in Indonesia; assessing their preferences toward each reward element provided by the company using Maxx-Diff survey and analysis, followed by identification of employee segmentation based on their preferences, finalized by focus group discussions with respondents and key stakeholders to further understand their needs. 

Our analysis found that 22% of the total reward budget was allocated to reward elements that were not considered important or appreciated by employees, indicating significant optimization opportunities for rewards without increasing the total company budget. Clustering the employees resulted in four significant employee groups, all having hygiene factors they deem important, with specific preferences that can become the realm of mass customization for each group. This study highlights the importance of understanding employee preferences and how reward strategies can be optimized to create unique experiences and improve the overall employee experience and wellbeing, benefiting both the employees and the business.

Keywords: Reward Strategy, Reward Optimization, Mass Customization, Employee Experience, Employee Wellbeing

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