The value of compensation is not in numbers, but in the outcomes it creates.

Fifty years ago, the median home price in the Denver area was about equal to annual household income.  A house today is over 5.1 times what its owners earn each year.  This is not just a regional problem—home prices have risen 4.2 times faster than income nationwide.  And it’s not just about owning a home—rents are rising at record paces as well.

Housing is just one expense outpacing wage growth.  Healthcare, education, utilities, and clothing costs are all rising faster than income.  It is an objective fact that cash compensation is less valuable now than ever before.

Benefits have faced similar headwinds.  Extreme costs mean employers spend more than ever on healthcare even as the employee’s deductible has more than doubled since 2010.  It has gotten so bad that average medical debt now outstrips other personal, nonmedical debtPensions are virtually dead and employees struggle to contribute to their retirement plans.  Employer-provided life insurance options are insufficient for most workers.

And what about all of the great voluntary options employers offer?  HSAs, DCAs, FSAs, LTD, STD, legal programs, identity protection, pet insurance, discount programs…the dizzying array of benefit choices certainly hold tremendous value potential, but less than one-in-five understand how to access it.

Organizations need to reconsider the value they derive from their compensation model.  People are changing jobs at a higher rate than ever, and the most common reason is that employees are unable to access the lifestyle and financial progress they desire from their compensation package.  Because it is harder to convert income into outcomes than it ever has been, people job-hop in an endless attempt to make ends meet.  This means that even a marginal salary increase can lure away talent.  Great pay and benefits are quickly bested by a slightly higher offer that employers did not even know was out there.  This never-ending cycle of transition is costly to employers and employees.

A better system would keep talent happy by making sure individuals are achieving their desired outcomes.  This requires creativity on the part of employers.  Instead of the focus on the “best” pay and benefits, it is time to rethink compensation in terms of how effectively it delivers the outcomes employees want and need.

We know that people want comfortable lifestyles, adequate savings, appropriate protections, education plans, and funded retirements.  We know that compensation is not delivering those essentials.  But we also know that individuals have unique challenges and goals: dealing with medical debt, credit cards, student loans, special needs, family vacations, side businesses, home improvements, and a desire to choose products and vendors based on shared values.  Identifying the core and unique goals at the individual level and creating a total rewards system that delivers those outcomes is how to drive value.

Fortunately, there are more innovative resources than ever before to help people achieve their desired outcomes.  Leveraging scale as an employer gives access to tremendously valuable options that employees can not obtain on their own.  Tax preferences, rewards programs, discounts, capital solutions, wellness options—there are billions of dollars in latent value that employers could distribute to their teams.

Unfortunately, all of these great tools add complexity to the already poorly-understood benefits platform.  It is incumbent on employers to not only build a world-class total rewards program, but to also provide personalized guidance to help employees extract the potential value based on their individual needs, goals, and circumstances.  Otherwise, compensation is an endless race to pay enough to acquire talent…until a better offer comes along.