Total Rewards is best described as a strategically focused approach that includes financial and non-financial complementary elements designed to recruit, develop, retain, recognize and motivate employees.
In order to achieve these objectives, companies must design and implement the “right plans” as part of their Total Rewards Package. For example, if an organization provides a costly but phenomenal benefit package, this will help to attract and retain staff. But to maximize its return, the company must communicate the value of this program to employees and their families.
Providing employees with educational opportunities (and paying for them), has long been viewed as a prized benefit by employees, and therefore should enhance the Total Reward Package. The hard costs involved with the education benefit are usually more than offset by the increased knowledge and skills which directly benefit of the company.
These elements must be perceived by the employee to be of value. The employee must also be perceived as worth the cost of these elements by the employer. A Total Rewards approach allows an employer to tailor their Total Rewards program to meet challenges as demographic changes, managing workforce costs, and a method to support business objectives. It blends elements of compensation and benefits with basic human relations skills.
Total rewards involves the deliberate integration of five key elements that effectively attract, motivate and retain the talent required to achieve desired business results. Each of which includes programs, practices, elements and dimensions that collectively define an organization's strategy to attract, motivate and retain employees. These elements can be categorized under the following:
• Compensation
• Benefits
• Work-Life (flexibility)
• Performance and Recognition
• Development and Career Opportunities
Total Rewards Strategy means leveraging the five elements to attract, motivate, and retain.An important dimension of the model is the "exchange relationship" between the employer and employee. Successful companies realize that productive employees create value for their organizations in return for tangible and intangible value that enriches their lives.
The compensation component of the Total Rewards Package, the biggest cost item, may be more significant to some employee groups than others. For recent graduates, compensation may be the critical component that they look for in a prospective employer, since they have limited experience in the corporate environment and may not necessarily know what they are seeking. On the other hand, individuals with families may be willing to forsake higher pay and are more interested in a good benefits package. Those employees in the later years of their career are typically seeking a sense of security and belonging.
Each component of the Total Rewards Package must be viewed as not only based on its own virtues, but also in the context of a big picture. Ultimately, the "whole" should be bigger than the sum of its parts, and it is the totality of the Total Rewards Package that will make a difference and meet both the company’s objectives, as well as, the employees’ needs.
