What are total rewards? Building an amazing total rewards packagePublished: 2022-08-05
Today’s job seekers are looking for a lot more than just a pay bump. Salaries matter, but if given the choice between working at an organization that offers higher pay and one with a reputation for providing a variety of exceptional incentives and other forms of recognition, many employees would choose the latter.
That’s why taking a holistic approach to the value your company offers employees — rooted in the concept of total rewards — is so important when it comes to attracting, engaging, and retaining employees. This guide is your introduction to total rewards, from what they include to how to implement a winning total rewards program at your organization, no matter what budget you’re working with.
What are total rewards?
Total rewards are all the financial and non-financial benefits a company uses to entice, grow, care for, and retain talent. They address all the pain points for modern employees, from the need for recognition, to better work-life balance, to opportunities for professional growth and advancement. Understanding and communicating total rewards helps your organization better display the value it provides and enables employees to take advantage of all your company offers.
Making your company’s total rewards package known to current and prospective employees is a fundamental part of attracting the right talent and keeping them for the long haul. That said, avoid emphasizing minor perks like free coffee or the single ping pong table in your building. Doing so will make employees and candidates feel like your company is noting these negligible rewards because it lacks substantive incentives.
What do total rewards encompass?
Total rewards doesn’t just pertain to financial compensation 一 it also includes healthcare benefits, time off, recognition programs, and more. Let’s go over the common elements of a total rewards package and explain why each is a significant piece of the total rewards puzzle.
Financial compensation isn’t the be-all and end-all of incentivizing employees, but it’s still a key part of an organization’s total rewards offerings. This category includes salary, bonuses, commissions, stock options, and more. Think of it as the foundation for an effective total rewards strategy. If you offer a tantalizing array of benefits but neglect to provide competitive compensation, you’ve undermined your company’s entire total rewards package.
Recognizing your employees reaffirms that you appreciate and respect their hard work. While monetary recognition like reward points, gift cards, meaningful experiences, and swag matters, providing frequent social recognition can be even more powerful. Companies that provide social recognition are four times more likely to improve stock prices, twice as likely to improve NPS scores, and twice as likely to see improved employee performance.
Encouraging everyone to embrace social recognition, from the C-suite to entry-level employees, will help your employees feel like their work is truly appreciated. Publicly thanking someone in a meeting, shouting out a job well done on company social media, or posting about a colleague’s work on an internal forum are all meaningful ways to make people feel valued. But the best way to facilitate company-wide recognition is with an employee recognition and reward platform that lets all team members say thanks in fun, unique ways no matter where and when the urge to show recognition strikes.
Employee benefits and incentives
Employee incentives include health and retirement benefits, gym and wellness plans, flexible work arrangements, paid time off, tuition reimbursement, and much more. These days, employees expect an outstanding array of benefits, so your organization should implement a variety of strategic employee incentive programs. Unique benefits such as referral programs, the ability for employees to choose from among a set of projects, and talent development initiatives help your company stand out from the competition.
The benefits of understanding and improving total rewards
Incorporating the concept of total rewards into your organizational culture and developing an exceptional suite of rewards doesn’t happen overnight. But the time and effort it takes to evaluate and improve your organization’s offerings pays dividends in the long run. Here are just some of the ways your organization stands to gain.
Higher employee engagement
It’s simple: when employees know they’re valued for their contributions, they’ll put in more effort. A total rewards program can be a big factor in motivating team members and improving employee engagement. After all, employee recognition is the single biggest driver of engagement, and it’s also one of the biggest components of a great total rewards package.
A stronger employer brand
Your employer brand can be a hugely powerful recruiting tool. Candidates want to work for companies that treat employees so well that they hear about it from their friends or online. An amazing total rewards program is sure to get employees talking and more candidates excited about joining the company.
Improved employee retention
Retention is one of the biggest challenges facing companies today, and a well-communicated total rewards package is a key part of any employee retention strategy. After all, if you’ve got access to incentives other companies in the industry can’t match, it’s that much less appealing to leave your current employer. In addition, educating and re-educating your employees on all of the perks they have access to increases the likelihood they’ll participate in programs that will deepen their sense of loyalty to your organization.
Contributing to an exceptional employee value proposition
Your organization’s employee value proposition (EVP) includes everything your organization offers to team members, like a great culture, a convenient location with a short commute, and, of course, its total rewards package. It’s a key driver of both employee retention and recruitment. Without a wide range of enticing benefits, your organization’s EVP is unlikely to rank well when compared to the competition. Ask employees what incentives they really value, align your total rewards package to match, and you’ll have significantly improved your company’s EVP.
4 steps to building a winning total rewards strategy
Ready to launch or revamp a total rewards strategy at your organization? Follow the four steps below, and you’ll be on your way to an impactful total rewards program in no time.
1. Implement a points-based reward system
The appreciation employees receive at your organization, whether from their peers, leadership, or the company itself, is one of the most critical components of a total rewards package. The most impactful employee recognition programs empower all team members to easily provide and receive both social and monetary recognition — and the easiest way to get there at your company is with an employee recognition platform that supports points-based rewards.
With this system, all employees gradually accrue points that they can award to others whenever they send a message of thanks to another team member. Whenever the recipient has amassed enough points, they can redeem them for something that they actually find exciting from a wide-ranging catalog of rewards. This simple, effective system encourages all team members to frequently show appreciation to others by making recognition an engaging, fun, and mutually rewarding experience.
2. Choose incentives your employees actually want
The best incentives in the world won’t matter if your employees aren’t interested in them. To ensure the benefits your company offers are things your employees value, research the range of incentives modern companies can offer, and then determine which team members want most. Don’t simply schedule a series of meetings with employees to ask them about current and potential incentives, though. The answers you get are unlikely to be completely honest, and you can’t continually gather up-to-date information with the occasional meeting either.
Instead, the best way to get honest input from employees on this critical topic is by collecting real-time feedback anonymously with the help of an employee engagement platform. Using pulse surveys and always-on feedback channels, your company can effectively align its total reward offerings with employee preferences both now and in the future.
3. Effectively communicate total rewards to employees
The whole point of having total rewards is for employees to take advantage of them 一 but they can’t do that if they don’t know what programs exist. Build a total rewards communication strategy that includes describing total rewards when an employee onboards to your company and providing statements for employees to remind them of incentives they may have forgotten.
While crafting personalized statements for each team member, organize different types of total rewards to make the list easy to parse. And keep your value estimates for each reward realistic, so employees don’t feel that your company is exaggerating how much certain offerings are worth. After the statements are complete, provide them to employees confidentially on an annual basis, either through a secure digital channel or in-person during a 1-on-1 meeting with the employee’s manager.
4. Monitor the impact of your total rewards program
Total rewards programs shouldn’t be one-and-done projects. Continually collecting honest employee input and making adjustments to your total rewards offerings reinforces your commitment to your employees and maximizes the impact total rewards can have on their well-being and output. Of course, simply collecting information is not enough. Analyzing feedback and turning insights into action is perhaps the most essential aspect of continuous improvement.
Developing and executing solid action plans shows your employees that their voices are being heard and helps your organization make the most of its total rewards budget. For instance, if your latest pulse survey shows that employees want more recognition, and internal data suggests that few are utilizing the free gym memberships your organization offers, it may be time to put more of your dollars behind an employee recognition program. Or if employees feel that the biggest contributors at your company are underappreciated, set aside some funding for monthly employee awards to highlight all the ways team members contribute to your organization.
Take total rewards to the next level
Building an extensive, inclusive set of total rewards and communicating them internally and externally can improve your company’s reputation, recruiting metrics, and level of employee engagement. Of course, these results are only achievable when you know what employees really want and have the right software to support a world-class total rewards program.
That’s just what the Achievers Employee Experience Platform offers. It combines the feedback gathering, analytics, and planning tools of Achievers Listen with the exceptional recognition capabilities of Achievers Recognize, so your organization can stay on top of changing employee preferences and nimbly adapt its total rewards offerings to stay ahead of the competition.