Total Reward is a concept that emerged in the 1990s that called for employers to go beyond salary and vacation and include less tangible benefits provided to employees when communicating to them about their compensation packages. This was done as a way to maximize the impact of compensation on employee motivation and commitment and help to attract, engage and retain a talented and productive staff.

This article examines the latest manifestation of this concept and explores the range of working models and definitions of “Total Reward” that have been developed by top HR consultancies. Hay Group’s model, for instance, goes beyond the usual tangible rewards to include an organization’s values, ability to inspire, quality of work product and opportunities for staff growth. An enabling environment and work-life balance are also key aspects of their idea of “Total Reward.”

The article notes that an effective total reward strategy also enables employers to align the needs of employees with overall organization objectives. The positive bottom line effect of this concept is reflected in a 2009 management survey that found that one-fifth of respondents had adopted a total rewards approach, with another 22 percent planning to do so by the end of the year.

The article warns readers, however, that there is a considerable amount of work involved in developing a total rewards strategy. Key decision-makers across all company departments and functions must be involved to gain a full understanding of the company’s work culture, staff demographics and key performance indicators. The existing compensation policy must also be aligned with business objectives and reward strategies. Employees should be surveyed to determine which benefits staff most value and any final package should be segmented to appeal to the full range of job roles and lifestyles within the workforce.
The article provides a number of valuable guidelines for creating an effective total reward program, communicating it to employees and anticipating and addressing potential problem areas, including union concerns and what to do when the package so effectively communicated begins to shrink due to economic considerations.

Source: Nicola Sullivan, Employee Benefits; May 8, 2009

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