It has never been more difficult than it is now for organizations to attract and retain top talent. To succeed in this endeavour, employers need to go beyond offering a competitive salary and embrace a holistic approach that includes what is known as a total rewards strategy.
A well-designed total rewards strategy goes beyond monetary compensation, incorporating a wide range of benefits, incentives, and recognition programs to create a compelling and engaging work environment.
Creating an effective total rewards strategy that meets the needs and aspirations of employees while aligning with the organization’s goals requires careful planning and thoughtful execution. In this article, we’re going to present seven invaluable tips for building a competitive strategy that helps attract, motivate, and retain high-performing talent.
What is a Total Rewards Strategy?
A total rewards strategy is an approach that organizations use to attract, motivate, and retain employees by offering a combination of monetary and non-monetary rewards.
Total rewards strategies go far beyond a simple focus on salary and benefits and encompass a broad range of elements that contribute to employees’ overall experience and satisfaction in the workplace.
A well-designed total rewards strategy aims to create a competitive advantage for organizations by providing a holistic package of rewards that align with the company’s goals, culture, and values. It recognizes that employees have diverse needs and preferences and seeks to address those needs through various components of the strategy.
What Elements Does a Total Rewards Strategy Include?
A total rewards strategy will usually include several key elements, including:
Compensation: Although a total rewards strategy is about more than just compensation, it’s important to include it. Compensation of course is anything made up of base salary, bonuses, commissions, and any other monetary rewards directly tied to an employee’s job performance, skills, and experience.
Benefits: This encompasses a wide range of non-monetary rewards and perks such as health insurance, retirement plans, paid time off, flexible work arrangements, wellness programs, employee assistance programs, and other benefits that support employees’ physical, mental, and financial well-being.
Career Development: A strong total rewards strategy includes opportunities for career advancement, professional growth, and skill development. This can involve training programs, mentorship initiatives, tuition reimbursement, leadership development, and clearly defined career paths within the organization.
Recognition and Rewards: This element focuses on acknowledging and appreciating employees’ contributions and achievements. It includes formal and informal recognition programs, performance-based rewards, incentives, bonuses, and other forms of acknowledgment to motivate and engage employees.
Employee Wellbeing: This element focuses on creating a positive and healthy work environment that supports employees’ physical and mental well-being. It includes initiatives such as employee wellness programs, health and fitness facilities, counseling services, stress management programs, and other resources aimed at promoting a healthy work-life experience.
Why is a Total Rewards Strategy Important?
The importance of a total rewards strategy has everything to do with the fact that it can be the make or break factor in whether an ideal candidate chooses to take your job offer. An attractive total rewards offering can help attract top talent to your company while keeping existing employees happy and loyal to your organization.
Attracting Top Talent: A robust total rewards strategy can be a powerful tool for attracting top talent by offering a comprehensive package of rewards and benefits that go beyond just salary. It helps organizations stand out and position themselves as desirable employers.
Retaining Key Employees: Employee turnover can be costly and disruptive to an organization. A well-designed total rewards strategy can contribute to employee retention by providing a compelling value proposition that goes beyond financial compensation.
Supporting Organizational Goals: A total rewards strategy can be aligned with the organization’s goals, values, and culture. By designing rewards and benefits that reinforce desired performance, it can help drive organizational success. For example, if innovation is a key goal, the strategy can include rewards and recognition programs that encourage and reward innovative thinking.
7 Tips for Building a Competitive Total Rewards Strategy
1. Take Stock of What You’ve Already Got
It’s unusual that organizations have to start from nothing when building a total rewards strategy. You’ll already be compensating your employees financially and you’ve likely already got some benefits in place for them already.
That’s why when approaching the task of creating a total rewards strategy, you should take stock of what you’ve already got in place. Conduct an audit for an overview of the things you’ve already got on offer and then use that as a starting point for making improvements.
2. Get Input from Employees
It’s no good implementing a total rewards strategy that employees won’t value. To avoid doing this, seek input and feedback from your employees to gauge what they think about your current compensation and reward offerings, and how they think they could be improved.
You can do this by conducting a survey, holding employee focus groups, and asking for people’s thoughts during stay and exit interviews.
3. Identify Your Goals
It’s important to know what you want your organization to achieve with its total rewards strategy and how this will support your long-term goals. Knowing this will help you identify what to focus on when building your strategy.
If retaining employees is a pain point, for example, and you want to improve this, you should focus parts of your total rewards strategy on incentivizing people to stay with you by offering things like training, upskilling, and opportunities for internal development.
4. Understand Your Workforce
The best total rewards strategy is built around your employees. In addition to getting their input, it also helps to possess a deep understanding of their demographics, preferences, and aspirations.
Don’t just conduct surveys and focus groups but also look to engage in open dialogue wherever possible and collect data to gain insights into what motivates and engages your workforce. This will help you tailor your total rewards strategy to their needs.
5. Offer Customization
Recognize that each employee is unique, with varying preferences and priorities. Provide a customizable approach to total rewards, allowing individuals to tailor their benefits and incentives to suit their specific needs and circumstances. This personalization enhances employee satisfaction and engagement.
Provide employees with a range of benefit options and allow them to choose the ones that best align with their individual circumstances. For example, offer different health insurance plans with varying levels of coverage or provide a selection of retirement plans to accommodate different investment preferences.
6. Make Your Employees Aware
Transparency and communication are key to ensuring that employees understand the value of the total rewards strategy and appreciate the benefits available to them. For example, you could do this through Q&A sessions or by providing answers to frequently asked questions via an internal intranet page or wiki.
Regularly communicate updates, changes, and opportunities while providing resources for employees to learn and make informed decisions. Clear communication builds trust and engagement.
7. Keep Evaluating and Adapting
A total rewards strategy is not a static entity. Regularly assess its effectiveness and gather feedback from employees to identify areas for improvement.
Be agile and willing to adapt your strategy to meet changing market dynamics and employee expectations. Continuous evaluation and refinement ensure that your total rewards strategy remains competitive and impactful.
In Summary
By implementing these seven tips, organizations can build a competitive total rewards strategy that attracts, motivates, and retains high-performing talent. A comprehensive and tailored approach to employee rewards and recognition will not only support organizational success but also foster a culture of engagement, productivity, and satisfaction.