Total Rewards Strategy for HR: A Complete Guide
The pandemic brought many changes, including how people look at their jobs. Before, monetary compensation was the critical factor for choosing and sticking to a job. But with the pandemic and the stress it brought, employees are no doubt re-evaluating their priorities. This signals the employers to support the needs of their people holistically as humans and not just as employees.
Through their total rewards strategy, employers are gradually working toward creating a positive employee experience to attract, engage, and keep talent.
In this article, we will discuss:
- What are total rewards?
- Difference between total compensation and total rewards
- Benefits of implementing total rewards
- Step-by-step guide to implementing the strategy
- Total rewards strategy examples
- How OffiNeeds can help implement a total rewards strategy
What are total rewards?
The total reward is a strategy that provides monetary compensation and other benefits, growth, and developmental opportunities for employees who meet specific targets, according to SHRM. The package includes all the financial and non-monetary benefits, perks, incentives, career development, employee rewards, and recognition.
When an excellent total reward strategy is in place, it will motivate the workforce to do better and increase productivity and performance. Besides, it will reinforce the balance between corporate money spent and employee engagement.
Difference between Total Rewards and Total Compensation
Although total rewards and total compensation sound similar, they differ.
|Total Compensation||Total Rewards|
|Base pay+Variable pay+Bonus, stocks, insurance, pension plans, commutation allowance, PF, etc.||Total compensation+other benefits like employee perks, personal growth opportunities, performance and recognition, work-life benefits|
|Cost to the company||Reward system|
|Annual event||Ongoing event|
Benefits of Implementing Total Rewards Strategy
Below are reasons why an HR total rewards strategy is essential:
1. Competitive advantage
A comprehensive total rewards strategy gives you a competitive advantage over others because talent moves where there is recognition and rewards.
2. Attracting talent
In a candidate-driven job market, a competitive rewards strategy and a holistic approach to employees’ well-being is a sure crowd puller.
3. Employee satisfaction and engagement
Satisfied employees are the most engaged. So, meeting the essential employee needs through a rewarding strategy dramatically benefits your business
4. Retaining talent
If the total rewards strategy is wholesome and rewarding, employees know that the wisest decision is to grow with the organization and not look for opportunities elsewhere.
5. Improved performance
When all the basic needs are met through the total rewards strategy, employees are happy and engaged at work and perform better, thus helping the organization reach its goals.
📌 Further reading on employee engagement:
- Guide to creating an employee recognition program
- Employee engagement strategies for organizations
- Find top employee engagement companies in India
How to Build a Total Rewards Strategy for HR Professionals
Step 1. Audit your rewards and compensation strategy
This step can help you assess where you currently stand in your rewards and compensation area. Look for the different components and compare them to find how they’re doing.
Step 2. Ask your employees for feedback
Employees are the best feedback providers as beneficiaries of the total rewards strategy. First, survey to ask them what matters and what doesn’t. Follow this by a focus group to tap into the emotional sentiments. You’ll be surprised by the wealth of information you receive.
One other place to look for information is your exit interview data. Exiting employees are often honest about the compensation aspect. So, count their feedback in as well.
Step 3. Market research
Perform market research to understand the market trend and what your competitors provide their employees as part of the total rewards strategy.
This is vital because talent moves toward places that value their work, recognize their contribution, and compensate well.
Step 4. Analyze the data
Now, with the wealth of data, identify the good and areas of improvement. Next, identify your goals and priorities and how they marry with your company’s vision, mission, objectives, and business goals.
For example, you notice that the low retention rate correlates with uncompensated work hours. Then, your strategy should look into the hours of work your employees are clocking and revise your overtime compensation.
Ensure your leadership team is on onboard the strategy revision with clarity on the market standards, how you need to ramp up your total rewards, and what repercussions you could have if you don’t.
Step 5. Prepare the strategy document
The revised strategy document should align with your company’s values and be inclusive, flexible, fair, and balanced.
Give options for employees to choose the plans that work best for them. For example, an employee might pick meal vouchers, while the gym reimbursement might work better for someone else. So, give the gift of choice to them.
Step 6. Roll out your total rewards
Every new or revised strategy needs a proper communication plan. First, use town halls to reveal the system, followed by webinars and office hours to your employees to help them understand what is changing and how it will impact them.
Give a dedicated space on your intranet for the total rewards strategy and upload relevant documents and information kits. Your goal is to remain transparent and make your employees find information as easy as possible.
Step 7. Measure the metrics and impact
Measure your expenditure and mark it against the positive impact it has on your employees, the culture, and the performance of your company.
For example, your NPS (Net Promoter Score) can tell many things. First, compare your NPS before and after your total rewards strategy and pick inferences. Then, talk to your employees and hear from them how they benefit.
The total rewards strategy is not an annual event but an ongoing process with scope for changes and improvement. The game is yours if you take your employees’ feedback to enhance your strategy.
📌 Learn more about different employee engagement activities to motivate employees.
Examples of Total Rewards Strategy
1. Extended PTO
Are you sticking to one personal leave and a 0.5-day sick leave every month? Then, it’s time to revisit and be compassionate with the needs of your employees.
Millennials, almost 45% of the workforce, emphasize caring for the family (child care and elder care). So, devising an extended PTO (if not unlimited) can mean a lot.
2. Sabbatical option
We all have phases in life when we need to slow down, take a break, do something different, look after an ailing parent, or tour the world for leisure.
A sabbatical plan in your total rewards strategy is an excellent provision to show your employees that you care about their life and well-being.
3. Flexible working hours
With the pandemic, we’ve learned to integrate work and life and proved that we could get the job done from wherever. So, flexible working hours and work-from-home options can tell your employees that they matter and that their choices are valid.
4. Life event gifts
How are you celebrating your employees’ life events? Show them you care about milestones in their personal lives by sending gifts and warm greetings. This is an excellent way to create stickiness.
Loyal employees are the pillars of your company’s growth. So, include rewards and recognitions for your long-service employees and show the rest that you value loyalty.
6. Home-office set up an allowance
With increasing flexibility in work, employees will appreciate an allowance for their work from home-office setup. The allowance could be a one-time settlement for your employees or a need-based reimbursement. But this is a stealer.
7. Parental leave
Consider a more extended parental leave policy so new moms don’t feel rushed to return to work and dads get considerable time off to bond with the newborn.
How OffiNeeds can help you build a Total Rewards Strategy in your organization
Every organization’s success lies in how appreciated and engaged the employees feel. Unfortunately, with the pandemic and great resignation, your workforce has innumerable opportunities to job-hop.
To prevent this, you have to build a positive connection from the beginning. Here is where corporate gifts from OffiNeeds can help you.
OffiNeeds is India’s most prominent corporate gifting company, with 17 years of experience and exceptional expertise in the gifting realm. From serving over 6000 businesses, we have seen our clients’ engagement rates go up.
Some of our best corporate gifts ideas to shape up your total rewards strategy are:
- Employee welcome kits
- Life event gifts
- Diwali gifts for employees and clients
- Work anniversary gifts
- Festive gifts
- Performance rewards
Corporate gifting partners are well-versed in keeping themselves updated with trends, sourcing, customizing, holding inventory, and handling deliveries. So, include corporate gifting into your reward system.
Employee engagement is an employee’s emotional connection with their organization. The relationship does not pop up when one receives your company’s offer letter or on his first day at work. Instead, it builds up over time through deliberate efforts from the organization.
Applying Maslow’s hierarchy of needs to employee engagement, the goal is to have more engaged employees to nurture a positive work culture. But their basic needs, such as money, proper working conditions, and job satisfaction, must be met to get there.
In an employee-driven job market, having a competitive and comprehensive total rewards strategy can help you stand out as an employer that genuinely cares and rewards. Also, this will help your employees reach the “self-actualization” stage in the needs hierarchy, where they feel valued and engage in assisting peers to do better.