Annual pay raises: something employees look forward to and sometimes count on. But has the annual pay raise gone the way of the anniversary lunch and the 10-year watch? In a post-recession economy, with a young workforce that is more focused on benefits and flexibility, organizations are taking a new approach to investing in their employees. Employees are looking for less money and more alternative compensation. Benefits now make up 31.6% of employees’ total compensation, which according to government data is a figure on the rise.
So what does this look like? It could mean that a junior employee who produces exceptional work on a project gets an extra day or two off, instead of finding a one-time bonus in their next paycheck. It could look like a company lowering annual raises and providing spot rewards, like $100 gift cards to give employees when they deserve them. The element of surprise and the trophy value provides greater ROI for the employer than the additional padding in paychecks. The basis for these changes, aside from data proving that this is what employees want, is the rising millennial share of the workforce. Millennials are more focused on short-term flexibility, rather than long-term financial security. The post-recession mentality could be a peak into a permanent future for how employers give employees benefits.