- An employer’s total reward strategy should be a combination of all the reward, benefits and development components that it offers to staff.
- Collecting employee feedback is key to structuring a total reward strategy and offering benefits that appeal to an entire workforce.
- There are multiple ways to communicate a strategy, such as a total reward statement and personalised notifications from benefits platforms based on employees’ needs.
Given that 46% of employees say a benefits package is their most important consideration for a new role, according to Zest’s December 2023 Responding to the cost of living crisis report, it is essential that total reward strategies are well thought-out and present all the reward, benefits and development elements of the employment package. So, how can employers achieve this?
Factors to consider
For an effective total reward approach, employers need to ensure they offer benefits employees want and need. The strategy should highlight all the tangible and intangible elements of the package, so in addition to compensation and benefits, aspects such as learning and development or training opportunities, organisational culture, and performance and recognition are detailed. A key detail of a total reward approach is to present the the entire employment package, and sometimes monetary value, in one place.
When creating a total reward strategy, or assessing an existing one, employers can adopt a framework to explore the impacting factors, explains Charles Cotton, senior adviser at the Chartered Institute of Personnel and Development (CIPD).
“For example, employers should consider if there is a government change and what might this mean in terms of tax rates, pension regulation, the national living wage, reporting requirements, employee benefits taxation and payroll costs,” he says. “International organisations might need to consider how elections in other countries might affect rewarding and recognising staff.”
Employers should aim to recognise, reward, and address all wellbeing concerns, including physical, mental and financial ones, as this not only improves motivation but also retains talent.
Liz Walker, chief operating officer at Unum UK, says: “Employers’ total reward strategies must fulfil both employees’ needs and the organisation’s priorities. This is often easier when employers combine their individual HR, reward and benefit strategies so they can properly match them to corporate behaviours and goals and help create an inclusive workplace.”
Reward strategies generally must be consistent with, and supportive of, broader business goals, adds Alasdair Wood, work and rewards leader at Willis Towers Watson. “Other inputs will include competitive practices, employee expectations, cost and expected return on investment,” he explains. “This is important to consider, as there are robust ways to estimate the impact that any combination of reward elements will have on employee satisfaction and engagement.”
The right strategy
Today’s workforces span multiple generations, which can present varying employee needs. In order to offer benefits that will appeal to their entire workforce, employers need to understand their employees and use insights to shape their total reward strategy.
Gathering feedback through engagement surveys, focus groups, forums, social media, union representatives and recruitment agents will provide an accurate idea of what is valued, along with analysing employee demographics such as age, family status, and regional and cultural factors.
“The process of structuring an appropriate reward strategy should be informed by evidence and data, and involve sketching, testing and adapting,” says Wood. “Workshops allow input factors to be considered in turn and stakeholders to contribute their views to reach consensus.”
Employers also need to ensure their total reward strategies offer the right tools to support over the long-term, says Matt Russell, chief executive officer of Zest. “They can then utilise these insights alongside benefits take-up and engagement data to provide employees with the most personalised benefits package possible and ensure they understand the full breadth of their reward strategy, enhancing value for money,” he explains.
A total reward strategy should include flexibility in its benefits proposition that can be adjusted based on needs to help employees access the right support at the right time. It will also be influenced by an employer’s mission and culture, its business strategy, its benefits and reward budget, what the norm is for its operating sector, and what investors and customers expect.
“For example, if people must co-operate to get the job done, then there will be a greater emphasis on rewarding teamwork rather than individual performance,” says the CIPD’s Cotton.
Presenting to employees
Communication is key to making a successful reward strategy. It can be expressed in a concise total reward statement, which provides a monetary value of all benefits to engage employees, improve understanding and boost awareness.
Employers can also present a total reward strategy by being open and transparent about what this is trying to achieve, and why and how it will achieve this. This sets employee expectations for how they will be rewarded and what is available to them, often through a benefits platform.
“Employees should find it easy to understand and navigate platforms to ensure they can access the support when needed,” says Walker. “A 24/7 employee assistance programme (EAP) offering advice and information, as well as signposting to resources via the platform or externally, is a way to achieve this.”
Targeting specific demographics, such as those who may be more interested in specific benefits, is a useful approach to drive engagement, adds Russell “Benefits platforms allow employers to send targeted emails and notifications to staff alerting them of any upcoming benefits that may be relevant to them.”
It is vital that employees understand the total value of their reward package and have a clear idea of its true value to them. This can be achieved by structuring it based on insights and presenting it in an inclusive and personalised way.