What are “Total Rewards”?

Let’s begin by defining total rewards. A total rewards program encompasses a combination of compensation, benefits, and other rewards and recognition that employees receive from their employer. Not every total reward is tangible, like salary and bonus. Some are intangible such as career progression, flexible work schedules, and recognition programs. A total rewards program is not exclusive to larger employers – in fact, a total rewards program can be very beneficial for small and mid-size employers who are seeking alternatives to salary increases and bonuses in order to reward employees.

 

Cash Continues to be King

The reality for many American workers, especially in our inflationary economy, is that cash (i.e. salary increases and bonuses) is the most impactful reward. It is also the reality that salary increases are not keeping up with inflation. In a survey of more than 2,000 US workers, 53% feel their paychecks are not keeping up with the pace of inflation (SHRM). Employers are feeling the pressure as well, and developing a systematic approach to evaluating compensation is a key component of a total rewards program.

Employers should conduct regular salary surveys to ensure their salaries are equitable both internally and externally and should have a process for evaluating salaries and making adjustments. This is commonly associated with a performance review process, where employees are financially incentivized and rewarded for good performance, but can also be done in other ways, like by offering regular cost of living increases to keep up with changing economic conditions.

The Value of Traditional Benefits

Many organizations are required by law to offer certain benefits. This typically affects organizations with more than 50 employees, and requires them to offer healthcare, workers compensation, and certain paid leaves. Despite what is required, the value of those benefits often varies by age. For example, Gen Z ranked benefits like healthcare among the least important things they look for in a job, while baby-boomer Americans tend to place a high value on retirement benefits.  However, while Gen Z may not rank benefits as an important part of choosing a job, “Generation Z places more importance on mental health than other groups, with each successive generation valuing it slightly less than the one that preceded it” (Aflac).

There are also several benefits that have gained popularity in recent years as companies get creative and offer benefits like pet insurance, childcare support, and student loan repayments – all of which hold value for certain workers. Other opportunities to make a meaningful difference for employees include technology stipends (i.e. stipends for home office equipment or cell phone stipends), continuing education reimbursements, or transportation benefits – which can be particularly meaningful when implementing return-to-office requirements.

When it comes to developing a comprehensive benefits program, consider the demographics of your organization. Understand the generational nuances, and ensure your plans are evolving with the changing dynamics of your organization. Employee surveys can be a great way to understand what employees value, especially if you have a multi-generational workforce. However, if you do choose to implement a survey, be sure you’re prepared to act on the results – lest you risk disenfranchising your employees.

Quantifying the Intangibles: What Total Rewards Really Matter?

Not every employee perk is quantifiable, but they’re no less valuable. In many cases, the “intangibles” are some of the most important considerations when it comes to choosing a new role. Organizations that offer flexibility to employees to maintain a semblance of work-life balance is highly sought after. This might look like a hybrid work schedule or perhaps a requirement that meetings happen only during specific hours, allowing, for example, working parents to manage school drop off and pick up without missing important conversations.

Workplace culture continues to be a major factor in employee happiness and employee engagement. Creating opportunities for human connection can foster meaningful relationship building, contributing to job satisfaction and productivity. Culture building can take many forms, and each organization will handle it differently. However, it goes beyond happy hours and free lunch – it requires an emphasis on trust, appreciation, and equitable opportunities.

These less tangible perks often make the most lasting impact, and when organizations prioritize these as part of their total rewards package, they can attract top-talent while also improving retention and engagement across their existing workforce.

 

Organizations that develop intentional, thoughtful, and well-balanced total rewards programs can attract and retain talent even when their compensation plans might be outmatched by competitors. By building a total rewards program that recognizes the diverse needs of a multi-generational workforce, organizational leaders can build thriving workplaces where employees feel valued, supported, and excited to stick around!

If you want to learn more about total rewards, you can watch our webinar on demand, where Flex HR experts guide you through the process of building and maintaining a competitive total rewards program. Would your team benefit from personalized HR support? Reach out today to learn more about Flex HR’s customized HR offerings.