Under a total reward approach, all aspects of the employee experience are recognised, with focus given to non-financial rewards alongside pay and those perks with a monetary value.
Examples of the non-financial elements making up total reward include access to career development training, freedom and autonomy, supportive line managers, recognition of achievements, supportive line managers and flexible working options.
A total reward approach can give employers an edge over their competitors not least because the whole premise is an acknowledgement that while pay is a key consideration, it isn’t the be all and end all when it comes to attracting, motivating, and retaining staff, as the current shortage of HGV drivers highlights.
It can also enhance the reputation of an organisation as an employer of choice and help create a powerful and unique employer brand. This is because a key characteristic of total reward is it recognises that people are a key source of sustainable competitive advantage and puts a focus on what they value. This should mean that employers are only offering rewards that staff want and appreciate.
Given the pandemic has put employers under more scrutiny over how they treat their staff, a total reward approach stands to enhance their reputation and is a way for them to demonstrate to staff, customers, investors and the media that they are ‘people-focused employers’.
Total reward also allows employers to customise their reward offer depending on their staff’s needs, lifestyle, and career stage, rather than relying on a one-size-fits-all package. Again, this can help to win over prospective staff and gives organisations a competitive edge in a turbulent labour market.
However, there can be potential disadvantages to a total reward approach. There may be a temptation for employers to shift the reward mix from pay to lower-cost benefits and non-financial rewards, and there is certainly cynicism among some employees that it is no more than camouflage for a strategy to keep pay to a minimum.
But if total reward is executed well and backed up with good staff communication and education, it should help enhance an organisation’s employer, customer and investor brands.
Charles Cotton is senior performance and reward adviser at the Chartered Institute of Personnel and Development