Total Rewards Quarterly

SMAC: Pushing the Frontiers of Rewards Management


Arnold Schwarzenegger immortalized our fear of machines in the famous Terminator series. Although the movie is far ahead of the present time, it did make us think of a future where machines will have a greater role to play. The present reality resonates with what Martin Ford, author of the book ‘The Rise of the Robots’ says: “nearly any white-collar job that involves sitting in front of a computer manipulating information” is under threat. For working professionals, this means ‘upskill or lose the job’. Although HR claims to be industry-agnostic, it is not innovation-agnostic. With technological advancement ushering in a new era; one dominated by Social Mobile Cloud and Analytics (SMAC) products, upskilling is definitely the order of the day for rewards professionals and the future of rewards in India.

With the West pioneering the adoption of automation and leveraging data to a far greater extent, we already have seen some traction in the way organizations are shaping their future business strategies. Multi-billion dollar organizations have come into prominence basis their ability to leverage data and commercialize it. The Facebooks and Netflixs of this world have become global giants because of their ability to commercialize data and provide enhanced consumer service. And this might just be the tip of the proverbial iceberg…

Virtually Connected – Disruptive Business Models

With the advent of internet, we moved towards a highly connected world. A sharp memory is possibly required to remember when the last international paid call was made; such was the impact of Skype. The lens through which we gather information was transformed with the advent of Google. Targeted consumer marketing as a phenomenon took off as companies started utilizing individual’s digital footprint. Never before had people created such a huge virtual data mine which enabled organizations to capture and commercialize personal data. Social media sites mushroomed because of their ability to keep users ‘logged in’ and use targeted marketing techniques to make revenues.

Data analytics now allows organizations to make customized offerings to consumers. Combined with mobile connectivity, today’s consumer is now used to real-time offerings, often a click of a button away.

Increased Consumer Demands

Generation Y (Gen-Y) today forms over a quarter of the global population and the proportion is even higher in India. With about 65% of India’s population under the age of 35, ‘lack of patience’ is the new normal mindset at a consumer level. This is in stark contrast with the earlier era where people were willing to wait. The way Indian consumers access their money is a perfect example of this change in the consumer mindset. Today, 45% of banking customers visit their local branch fewer than five times a year. This move from traditional queue system to withdrawing money to Immediate Payment Service (IMPS) is a testament to this new mindset.

With the emergence of new business models – those driven by constant connect and real-time offerings, the expectations of consumers are no longer limited to ‘service’. Consumers want ‘instant, customized services’ available as and when they want. These changes at the consumer level have in fact altered the behavior at an employee level as well. The emergence of on-demand, instant and customized offerings have created new challenges for HR compensation and benefits professionals. Organizations are now on the lookout for innovative practices to address this changed behavior of their workforce.

Demands from Rewards Professionals

With the expectations of both of HR’s key stakeholders – businesses and consumers (employees within the organization) changing, it is imperative for HR to change and be nimble-footed in its approach. Adopting technology to predict employee needs and better cater to them is the future of HR & rewards. Engagement and communication remain strong focus areas as rewards teams continue to look to build better awareness amongst employees today. Aon Hewitt’s Employee Benefits Study 2015-16 explains how communication and creating value for employees continues to be an area of concern for organizations. Of the 129 firms surveyed, 73% were concerned about the quality of communication and outreach with employees for better perception and utilization of their benefits programs. 81% of the surveyed organizations felt effective communication plays a strong role in employee understanding, perception of value. It’s vital for employers that employees experience differentiated benefits programs which are customized and available through multiple effective communication channels.

Investments made in the space of HR technology are consistently on this rise. The HR technology landscape globally is a USD 15 billion dollars market and in 2015 saw investments to the tune of USD 2.4 billion in new products. A lion's share of the investment is made in making the organization adopt ‘mobile’ HR technology tools. The rationale for huge investments in mobile infrastructure is justified as the world is going ‘mobile’. Globally, mobile constitutes 49% of the internet traffic. Closer home, Indians downloaded 6 billion mobile apps in 2016, up from 3.5 billion in 2015, outpacing USA to be the number one market for android mobile apps. In terms of engagement, the average Indian user spends 169 minutes per day on mobile apps. Needless to say, that at less than 30% penetration of smartphones, mobile is the way forward to engage the ‘millennial’ workforce.

Another area witnessing major investments is cloud. In the last three years, the Indian cloud computing market has almost been doubling in size year-on-year. With the clear benefits of being user-friendly, inexpensive and built for mobile, cloud has allowed tech firms to offer easy to implement, customized solutions across recruitment, learning, goal management, engagement, etc.

Although HR functions globally are investing in mobile and cloud HR technology tools, their adoption by rewards professionals is limited. Innovations in traditional ‘rewards’ space is the way forward.

In an attempt gauge the mood of the industry, Aon Hewitt conducted a dipstick survey to understand the future of HR in a world dominated by technology and analytics. The results of the survey suggested a drastic change required by the rewards fraternity.

  • 50% organizations surveyed said they will want to adopt machine learning to finalize allocation and distribution of annual compensation budget
  • 33% of organizations surveyed agreed to wanting to supplement market benchmarking data using social media sites like Glassdoor and LinkedIn
  • 58% organizations surveyed said they plan to use social platforms to mold employee preferences/ utilization of their benefits programs and policies
  • 40% organizations surveyed said they plan to create customized on-demand & need-based courses to enhance employee learning and development
  • 90% of the market leaders surveyed indicated the desire to go mobile using ads/pop-ups to communicate about the organization’s benefits and policies

With most organizations wanting to adopt new age technologies to ‘modernize HR’, it is imperative for rewards managers to upskill and leverage data better to become true business enablers. For rewards professionals to stay relevant in the market, they need to leverage both data and analytics to build customized employment experiences for their employees. Some changes required are:

Use of Social Media: With more employees going social with their salary details, organizations should leverage the social media to supplement and even replace market benchmarking data in future. In this new scenario, rewards managers should upskill themselves to manage transparency better in the organization.

Use of Mobile: Majority of organizations had expressed the desire to go mobile with their employee benefits communication. Taking a cue from e-Commerce organizations, rewards professionals should adopt something as shown in Figure 2.

Rewards professionals should upskill themselves to maintain more frequent and relevant communications with the workforce keeping in mind their individualistic needs for benefits.

Use of Analytics: With the advent of machine learning, organizations are planning to use it to finalize compensation budgets. Rewards managers should upskill themselves to act as a SME in finalization of budgets in collaboration with machine learning. Traditional budgeting process might be outdated in a few years time. Total Rewards managers should also leverage the power of analytics to create customized, on-demand and need-based courses by looking at employees’ learning history and search preferences.

Use of Cloud: In this era, a yet to be popularized term, ‘WAAS – Workforce-as-a-Service’ is slowly but surely gaining popularity. Total Rewards managers should upskill themselves to create a compelling EVP by creating an environment suited to their needs.

Some organizations are leveraging the power of analytics to create a more engaged workforce. Organizations like Best Buy, Cognizant India, etc. have quantified the importance of an engaged workforce. Organizations like AT&T and Google have established through quantitative analysis that a demonstrated ability to take initiative is a far better predictor of high performance on the job; thereby leveraging analytics in the HR field of talent acquisition1.

The world as we know it is undergoing a massive change and rewards professionals cannot remain agnostic to this change. To remain relevant in this new era, rewards professionals, just like engagement professionals will have to upskill themselves to be a true business partner and enabler.

In Summary

Organizations have had some success in using SMAC to create greater value to the employees and rewards managers will have to follow suite. The rewards manager of the future will need to embody the skills of a marketer for all its stakeholders as well as develop strong abilities in SMAC to remain relevant to the organization’s cause. At the very core, the rewards manager still needs to be a subject matter expert in the field of compensation, but by upskilling his/her data-driven capabilities, one of the most fulfilling jobs in the future can be performed far more effectively.

Data Source:


Aditi Dixit
Aon Hewitt Consulting

Shubhang Agrawal
Aon Hewitt Consulting

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