24 Jan Walk Away Value: What It Is, and How To Calculate It
For many employers, the goal of developing a Total Rewards (TR) Communication strategy is to make it as easy as possible for associates to determine the “big picture” of all the ways in which they’re being rewarded for their dedication and commitment to the company. TR Communication can also allow employees to model their potential future value, based on certain assumptions. The variables or assumptions are made by an employee to create a personalized model.
Below, we share some tips for helping employees calculate this value:
Christopher Ford, an HR and IT executive in the San Francisco Bay Area, calls this the Walk Away Value. The concept is to put the model out there in a forthright way, right at the fingertips of associates and their managers. This allows associates to judge the value of employment. It helps answer the question: Is this position going to meet my expectations over the next few years?
Why not recognize that and provide the tools to associates as part of the Total Rewards Communication?
Walk Away Value is the amount of money you are leaving behind if you separate from your current employer. When considering another position, it lets the associate understand exactly what they are walking away from (based on certain financial assumptions.)
According to Ford, “Walk Away Value also creates a long term engagement connection with employees. When employees think about leaving a company for better compensation, they tend to think about total compensation at a point in time. An employee who realizes their Walk Away Value thinks about Total Rewards vs. Total Compensation, and thinks about a period of time (3 to 5 years) versus a point in time. Walk Away Value could become a powerful retention tool in the marketplace.”
How It Works
An online tool, such as one provided by total reward statement software, presents a standard list of reward elements to the associate. Then, it builds a model showing the estimated future value of those elements and their sum, based on assumptions about growth made by the employee.
The model is easy for employees to use. It works like this:
Take your current compensation, incentive awards and other reward items such as company paid benefits and profit sharing.
Apply a growth factor to these items. (Salary increase, Appreciation of stock value associated with RSU’s or Option Grants, etc.)
Aggregate the value of these items looking ahead 3, 4 or 5 years.
The sum is the Walk Away Value.
If you’re searching for an easy way to communicate Walk Away Value and other components of your total rewards strategy to your associates, your organization may be an ideal candidate for total reward statement software. HRsoft’s REWARDviewTM software features calculation tools so that employees can spend less time on calculations but still have valuable information at their fingertips whenever they need it.
HRsoft is a leading provider of strategic talent management software that improves manager effectiveness and business results. Our full suite of cloud-based HR software solutions includes applicant tracking software, compensation planning software, total rewards software, stay interview software, performance management software, and content management software. For more information on our Total Rewards Software, REWARDview, click the button below!