What it is:
Total rewards are the total benefit employees receive when they accept a position with an organization. It typically includes more than the monetary compensation and benefits package. Whether it’s the perceived value of a great culture or a series of strategically determined ways where employees feel an increased sense of belonging, total rewards work to attract a candidate for employment in a competitive job market—and keep them there.
Total rewards typically encompass 6 areas:
• Performance management
• Talent development
• Work-life quality
When talking about total rewards, companies often refer to the “employee value proposition” – how to attract, engage, and retain their people. Therefore, rewards must be attractive to, and appropriate for, the employees you are looking to hire, motivate, and keep.
Total rewards include more than just compensation, although many companies struggle to get employees to see things like employee recognition or workplace wellness as part of their total rewards package. Total rewards are now starting to include things that affect the overall employee experience.
How an organization communicates total rewards can determine the value and effectiveness of the total rewards package. Deloitte found that 80% of organizations are “significantly lagging” behind employee expectations for total reward offerings, and the Net Promoter Score for total rewards programs is a -15!
How it impacts culture:
Companies typically develop attractive total rewards packages as a way to attract top talent and keep their best talent from leaving. A recent study found 17% of more than 1400 public companies have expanded the name and scope of their compensation and total rewards committee to include more culture and talent development initiatives.
Total rewards packages have a tremendous influence on attracting, engaging, and retaining the right people for your workplace culture. When total rewards are tied to the organization’s culture, employees who are hired and promoted best reflect and shape that culture.
“When employees can understand the total value of the rewards they receive from their employer, a proposed salary increase alone from a prospective employer will appear less significant.”
How to do it well:
Look beyond just salary and bonuses when talking about total rewards:
1) Expand your definition of total rewards. Move beyond compensation and traditional benefits. What does your organization offer in terms of flexible schedules? Career development? Employee wellness?
2) Provide meaningful awards. Casual Fridays and pizza parties are fun socialization activities, but not meaningful rewards for a job well done. Things like face time with executive leaders, special projects, recognition opportunities, and better paid family leave may be more attractive.
3) Create a total rewards brand. Deloitte found high performing organizations are 12X more likely to identify specific rewards offerings as competitive differentiators and highlight them in their rewards brand. Communicate often and consistently about your total rewards package, detail what it encompasses, and clearly articulate how it’s better than other companies’ offerings for your people.
“People work for money but go the extra mile for recognition, praise and rewards.”
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