You may be thinking: what does the term total rewards have to do with an HR column? Doesn’t this term total rewards typically refer to points or prizes earned by loyal customers at their favorite stores? True, but total rewards is also a model used in human resources. According to WorldatWork, an association for human resources professionals, total rewards is all of the tools available to the employer that may be used to attract, motivate and retain employees. Total rewards includes everything the employee perceives to be of value resulting from the employment relationship.
Increasingly it is clear that the battle for talent involves much more than decent compensation and benefits programs. While such programs remain critical, the most successful companies have realized that they must take a much broader look at the factors involved in attraction, motivation and retention.
The five key rewards elements of the total rewards strategy are:
Pay provided by an employer to an employee for services rendered (i.e. time, effort and skill). Compensation comprises four core elements: fixed pay, variable pay, short-term incentive pay and long-term incentive pay.
Programs an employer uses to supplement the cash compensation that employees receive. These programs are designed to protect the employee and his or her family from financial risks and can be categorized into the following three elements: social insurance, group insurance and pay for time not worked.
A specific set of organizational practices, policies and programs and a philosophy which actively supports efforts to help employees achieve success at both work and home. They address the key intersections of the worker, his or her family, the community and the workplace. The seven major categories are: workplace flexibility, paid and unpaid time off, health and well-being, caring for dependents, financial support, community involvement and management involvement/culture change interventions.
Performance and Recognition
Performance involves the alignment of organizational, team and individual efforts toward the achievement of business goals and organizational success. Recognition meets an intrinsic psychological need for appreciation for one’s efforts and can support business strategy by reinforcing certain behaviors that contribute to organizational success.
Development and Career Opportunities
Development engages employees to perform better and leaders to advance their organization’s people strategies. Career opportunities represent the plan for an employee to advance his or her own career goals and may include advancement into a more responsible position in an organization. The organization supports career opportunities internally so that talented employees are deployed in positions that enable them to deliver their greatest value to their organization.
These five elements represent the “tool kit” from which an organization chooses to offer and align a value proposition that creates value for both the organization and the employee. An effective total rewards strategy results in satisfied, engaged and productive employees, who in turn create desired business performance and results. The total rewards concept is one in which an employer can look to in their journey to becoming an employer of choice. For more information on the total rewards model, visit www.worldatwork.com. IBI