Growing your organisational value with competitive rewards

As of January 2023, only 20% of Malaysia CEOs believe that global economic growth will improve in the next 12 months, based on PwC’s 26th Annual Global CEO Survey. Despite this sombre outlook, CEOs don’t plan to reduce their workforce, as they focus on diversifying products and services and reducing operating costs instead. This tells us that CEOs recognise how essential the workforce is in running the business - and in the face of key issues of today like inflation, economic volatility and climate change, they are seen as the engine of transformation. Taking the necessary steps to ensure that they recognise the right values in their people, allows organisations to attract, retain and further develop the workforce to drive organisational value and greater business performance.

It is not uncommon for business leaders to experience the pressure of driving organisational growth when their teams face challenges aligning with organisational purpose and feel disengaged at work. Oftentimes, this stems from a lack of trust between leaders and the people who support them. However, a competitive reward strategy that addresses what each individual values most can help fuel organisational success.

Retaining talent with fair rewards

People are unique in what makes them feel valued and empowered. In line with this, it is worth considering a rewards strategy that addresses and aligns non-financial rewards to employee preferences and needs. A Total Wellness approach can help create the right employee experience for each individual, ensuring that they are engaged, motivated and productive. This means looking at the bigger picture in rewarding employees fairly, focusing on the wellness component of employee compensation, namely bonuses, recognition, workplace flexibility and career opportunities, apart from the salary component. 

Here’s how your organisation can acknowledge employees' value to the business and reward them accordingly:

1. Opportunities for training and upskilling 

Enabling your workforce means to facilitate the development of new skills and knowledge that can be applied to both their current roles and future roles. This can help improve overall job performance while nurturing an adaptable workforce with a continuous growth mindset. The good news for Malaysia is that employers are already starting to do this. 63% of Malaysians say that their company is upskilling compared to 40% of global respondents in PwC's Workforce Hopes and Fears Survey 2022 (Malaysia) report.

2. Career advancement and development 

Leading employers know this to be a key talent retention strategy as talented professionals are constantly in search of support systems that will help them build skills, knowledge and further their careers. According to LinkedIn’s 2023 Workplace Learning Report, 93% of organisations surveyed are concerned about employee retention and it has been indicated that the top retention strategies include opportunities for career growth within the company as well as opportunities to learn and develop new skills. Employees provided with pathways for career development are significantly more likely to feel loyal to their employer and committed to the organisation's goals and values. An under-investment in this area runs the risk of leaving talented workers feeling undervalued.

3. Work-life balance initiatives 

A recent study by Kisi indicated that Kuala Lumpur ranks as the third most overworked city in the world in 2022, placing just above Singapore, with Dubai and Hong Kong taking first and second place respectively. Overworking could be more pronounced in Asian economies with their relatively higher power distance culture. More often than not, concerns about employers’ perceived distaste for time off or leaves of absence can cause anxiety and compel employees to forgo taking available leave. In some cases, prioritising attendance can lead to greater issues down the line, for example, exacerbating health problems, having less time for family and even struggling from overwork, stress and burnout.

Unsurprisingly, PwC’s Workforce Hopes and Fears Survey 2022 highlighted that Malaysians are in danger of burnout with only 45% of respondents saying their employer is supporting their physical and mental wellbeing. To achieve a better quality of life, employees are turning to employers for greater work-life balance through flexible working arrangements, working hours, compensation leaves and even frequent mental health breaks. Employee wellness is a key aspect of the 'social' (S) pillar of ESG, and is part and parcel of achieving a just transition towards a low carbon economy.

Considering the cost of living in Malaysia

While salary may only be one component of employee rewards, it remains a top factor in people’s decisions to stay or leave their workplace, with 69% of Malaysians saying that pay is an extremely or very important consideration.

In line with fair rewards, matching pay to the standard of living across the different locations in Malaysia gives significant nuance to the overall rewards approach instead of merely meeting minimum wage laws, as the cost of living and other economic factors can vary greatly from metropolitan to rural areas. Bank Negara Malaysia (BNM) stated that the living wage for an adult based in Kuala Lumpur was RM2,700 as of 2018;  it may not be surprising if the current desired living wage raises by 25 per cent (i.e., RM3,375). Employers can consider the supply and demand for skilled workers in the local job markets as well as non-monetary compensation to help offset the cost of living in different states to attract and retain qualified employees. 

Recent developments in the job market have indicated that Malaysia is on the right track in terms of salary budgeting. According to Randstad’s 2023 Job Market and Salary Trends Report, companies have been reviewing and revising their Total Rewards offerings to retain and attract new talent in response to rising cost of living and hiking inflation in Malaysia. As such, the report indicates that we can expect to see 3% to 20% salary adjustments in 2023, depending on the economy, industry and other fringe benefits. 

With that being said, it is important to weigh these increments against the cost of living in the locations where employees live and work. This is because posting high value earners to locations with a lower cost of living could potentially increase the demand for goods and services in that location, subsequently leading to inflation. Hence, business leaders and governments must work together to ensure that while employees are compensated fairly, strategic measures are taken to keep inflationary pressures in check. 

To conclude, it is vital that businesses start looking at their investment in a sound total rewards strategy - the combination of wellness and rewards that employees receive from their organisations including wages and bonuses as well as recognition, workplace flexibility and career opportunities. Understanding how each employee is motivated and the support they require at different stages of their careers will help organisations not only attract and retain talent, but will develop a high value workforce for the future. 

We will be happy to discuss how you can deliver fair rewards to your workforce in growing your organisational value via your people. Speak to us today.

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