Working environments have changed and traditional reward structures don't cut it anymore. In this article, we’ll be doing a deep dive into the Total Rewards Strategy. It’s pegged to change workplace benefits going forward, so let’s unpack what it is, what it means, and how you can implement it in your business.
What Are the Components of Total Rewards Strategy?
A total rewards strategy is a workplace benefits system that covers monetary, beneficial, and developmental rewards for meeting goals. Businesses implement this to motivate their employees with a well-rounded incentive to promote growth for both the staff and the business.
These rewards can be applied to teams or individuals. By putting clear goals and incentives in place, studies show that employees experience an increase in productivity and performance. It is also a great way to celebrate achievements and wins.
An attractive rewards system can also boost your employer brand, catching the eye of talent when recruiting. With a motivated and result-driven team, you’ll be able to improve your business’s overall performance and achieve improved levels of growth.
As with any strategy, total rewards require a company-wide application and buy-in from execs. It’s a win-win for businesses, which are able to offer rewards to their staff while motivating them to achieve the goals set out. This system needs to include the collective and be understood by all.
How to Create a Total Rewards Strategy
To create a total rewards strategy, you need to:
Step 1: Analysis
Have a look at the current structure of compensation and benefits offered to employees to its current effect and benefit for all involved. Of course, you’ll also need to outline goals that your team can work towards achieving - these need to be ambitious but achievable to motivate the workplace. You also need to gain an understanding of which benefits add the most value to your employees, with the most reliable answers coming from the employees themselves. Based on these findings, recommendations can be made.
Step 2: Structure
Next, you need to design the structure for the total rewards system using the information you have gathered. This needs to detail eligibility, time frames, the work that is rewarded, and how the business will find it. This is relatively flexible so long as it aids in the overall concept, which is not solely based on compensation bonuses. Other reward options may include flexibility in work schedules, time off, training, and promotions.
Step 3: Implementation
The new system is introduced and implemented by the HR team. This includes sharing the relevant information so that there is understanding across the board. Keeping teams updated as to their progression towards goals will keep them motivated along the way. Of course, when goals and milestones are reached, be sure to deliver on the rewards promised.
Step 4: Evaluation
As with any new systems and processes in business, evaluations need to be conducted regularly. This will ensure that the total rewards system is working and supported. Importantly, it also ensures the cost of this strategy is worth it. When evaluating the performance of your total rewards strategy, take into account employee engagement, satisfaction, retention, and performance and weigh those up with the costs of traditional benefit structures.
Examples of a Total Rewards Strategy
Let's take a look at the various rewards you can include in your collection of employee rewards.
- Compensation: Monetary rewards for reaching targets, which can be paid out seasonally or contribute towards a year-end bonus.
- Benefits: Examples of individual bonuses include healthcare benefits, pension plans, gym memberships, and leave days that contribute to the overall wellbeing of your employees.
- Development: Providing professional benefits is another option. This is achieved by providing training or opportunities to advance one’s career, knowledge, or skill set. This will also help close skills gaps in your company.
- Recognition: Having company-based awards is a great way to commend service and achievements and to increase morale and friendly competitive spirit in the workplace.
Why We Need These New-Age Workplace Perks
Employees today are a lot more focused on living better lifestyles. Total reward strategies are effective because they give real-world value in various ways to employees. These incentives are beneficial to the business and its staff members, ultimately helping to attract, motivate, engage and retain employees. It helps improve perceptions of your employer brand while enhancing the employee experience.
The reason it has become so popular is that it is rewarding on a holistic level. It sees employees as people and is influenced by a range of relevant factors. This includes prevailing cultures and social norms. Total rewards strategies have become so widespread and successful because they speak to inherent needs that people have which traditional working environments did not recognize.
One clear example of this is purpose. People are also driven by purpose and perform best when their work has meaning and real-world value. Showing employees how their work affects the performance of the company can instill a sense of purpose. They also want to be sure that they are dedicating the majority of their waking days to an ethical business that cares about them. People are motivated by the need to feel security and upliftment from their employers. It isn’t just about a job anymore.
There you have it, our guide to understanding and creating your very own total rewards strategy. By following this model, you’ll be growing your business while inspiring and rewarding your employees in well-rounded ways that really count.
Nexa has revolutionized the way businesses are doing HR. To find out more about how we’re utilizing CRM technology to improve the recruitment process, or for employer branding and rewards strategies, book a meeting with us.