A competitive salary, while absolutely crucial, is not the sole factor in attracting and maintaining top talent. More than ever before, workers are looking for well-rounded benefits, positive work environments with opportunities to grow, and employers who value their wellbeing.
To stay competitive, your HR team should view compensation as more than just the bread and butter of money and traditional insurance. You should be looking at everything your company offers, and then relaying that information to potential hires and current employees – taking advantage of a total rewards strategy.
Let’s have a look at what a total rewards strategy is.
What is Total Rewards in HR?
In short, a total rewards system refers to all the benefits, monetary and non-monetary, an employee earns from their employer. It covers not just salary and traditional benefits, but employee development, recognition, and work-life balance as well. A total rewards strategy gives you, your employees, and potential new hires a comprehensive look at the value you’re providing to your workers, and it’s a fantastic tool for both recruitment and retention.
What to Consider When Assembling a Total Rewards Strategy
There’s a lot to account for when thinking about your organization’s total rewards package, compensation, benefits, culture, and more. To make it a little easier, let’s break it all down into its five components:
Total monetary compensation: Salary, wages, bonuses, and equity/profit sharing – basically, all the ways an employee can earn money from the company.
Benefits: Your traditional and voluntary insurance options, plus paid time off (including leaves of absence, holiday, and bereavement time), retirement savings options, and mandatory programs like worker’s compensation.
Employee wellbeing: Benefits that improve work-life balance and promote the employee’s overall wellbeing. Schedule flexibility, remote work options, stipends for dependent care, DEI programs, and mental health insurance are all elements that can contribute to employee wellness.
Recognition: Acknowledgement of worker’s efforts in the form of commendations and rewards for a job well done, timely and helpful feedback, and constructive course correction when problems do arise.
Professional development: Opportunities for promotion, department transfers, education, and cross-training.
5 Tips for Building a Successful Total Rewards Strategy
1. Before Moving Forward, Start With a Look Back
When building a successful total rewards strategy, SHRM finds that an initial assessment of your current benefits and compensation packages is a vital first step. It’s a great way to see the strengths and weaknesses of your current offerings, and done successfully, should give you a path toward building out your total reward strategy.
Here’s what a full assessment should entail:
Take stock of your current offerings. Look at trends for growth within your company. Review the organization’s compensation philosophy, whether or not current compensation is fair, and the usage data for current benefits.
Identify your organization’s strengths and weaknesses within the five component categories.
Collect employee feedback through pulse surveys, interviews, and focus groups. Find out not only what they’d like to see in the future but what they feel about their current compensation, benefits, and opportunities for advancement. Be ready to shift your offerings to better provide for what your employees want.
Define what your organization values most, and try to identify two things from this: the ways your current offerings align with those values, and options that can bring your offerings in line with those values.
Suggest how to fund changes – cutting back on underused or unpopular benefits to free up the budget for enhancements elsewhere, for example.
2. Take a Look At What’s Trending
Keeping up with trends won't just make your organization more appealing in the moment, it can help you to update outdated practices, and even potentially save money. You may spot new, unconventional ways to improve the value of your organization's rewards at little or no cost to the company.
Want some specific examples?
Overwhelmingly, job seekers are looking for inclusive employers that value diversity. Offerings like floating holidays, gender-inclusive family benefits, and flexible schedules are just the tip of the DEIB iceberg.
Demand for mental health services has skyrocketed in recent years.
Surveys show that a majority of millennial workers – who are slated to make up 75% of the workforce by 2025 – place advancement and career progression as a top priority in choosing a job. Making room for growth at your company will ensure you retain your top talent.
3. Be Open and Honest When Communicating
Keep in mind, your employees probably won’t know what a total rewards package is. Not only will you need to explain this to them, but educating them on what benefits are available to them is key.
Talk it all up – you’re using this information to sell your company, after all! Just be sure to remain honest when you do. Your organization’s total rewards program is a powerful marketing tool, but take care not to trip up on the pitfalls of storytelling. Don’t inflate the impact or value of your organization’s offerings, or you’ll wind up with unhappy employees.
4. Where Possible, Personalize Messaging
Go beyond sharing a bullet point summary of benefits and compensation by offering tailored information and examples specific to each employee or group of employees. This could be as simple as featuring a list of benefits an employee has available to them but isn't yet taking advantage of, or a more complex assessment of how much they are contributing to their 401K, and how much more they could earn by increasing their contribution.
5. Be Timely With Information, and Diversify How It’s Shared
Communicate often. Delivering this information as part of recruiting and at open enrollment is a great first step, but you can potentially increase your ROI by making sure to remind employees of their total rewards frequently. At annual review time and during special enrollment periods are great additions, but your company may have specific times when sharing this information is particularly beneficial.
Also, don’t hesitate to go beyond the binder. Paper and email summaries work well, but if you’re also able to offer an online hub where employees can easily reach this information year-round, all the better!