Total reward packages give employers the chance to communicate the full value of benefits to staff, says Jenny Keefe
What gets employees out of bed and into the shower on a freezing dark morning? It might be the cut and thrust of competition, the prestige attached to working at a well-known organisation or the desire to make a difference. Alternatively, some may want money to fund a new bathroom or kitchen, or simply to pay their bills.
Employers that adopt a total reward strategy recognise that it takes more than money to make the world go round. Instead of simply motivating staff through pay and traditional benefits such as pensions and company cars, some employers are realising that the overall workplace experience also has an effect on morale and productivity.
Both traditional and non-traditional benefits have a role to play in total reward. At one end of the spectrum there are perks such as pensions, private medical insurance (PMI) and company cars, while at the other are factors such as flexible working, training and volunteering opportunities, quality of leadership and even choice in the type of office equipment used.
The Chartered Institute of Personnel and Development (CIPD) splits total reward into two categories: financial reward and non-financial reward. Financial reward includes basic pay, share ownership and benefits with a cash value. Non-financial rewards include recognition, opportunities to develop skills, career opportunities and quality of working life.
Employers keen to explore the concept of total reward should consider factors taken into account by The Sunday Times’ annual survey of Britain’s 100 Best companies to work for. It ranks employers according to criteria such as leadership, opportunities for personal growth, staff wellbeing and the extent to which the organisation gives something back to society, taking into account the views of staff on each of these factors.
One employer that uses a broad interpretation of total reward is the University of Sheffield. It includes training and flexible working in its total reward strategy as well as employee involvement, which covers areas such as staff focus groups and volunteering opportunities.
Andrew Dodman, deputy director of HR at the university, says: “These elements are all promoted on our ‘my-Benefits’ website and through other internal channels, as being available to university staff. It is important to the university that employees are aware that training and flexible working opportunities are available to them. Employees can easily take advantage of what the university offers if they want to.”
Staff are motivated by more than just the number of zeros on their pay cheques, says Martha How, head of reward consulting at Hewitt Associates. “Factors such as flexible working and opportunities for career ad-vancement can have a substantial value for employees, and may help to retain and motivate them.
“It is worth mentioning these in a total reward statement and communicating the policy to employees in a creative and compelling way.”
What is a reward?
Total reward statements outline precisely what working for a particular company is worth, says Elliott Webster, flexible benefits director at PIFC Consulting. “They can include details of non-financial or less tangible benefits, such as training, as well as more recognised benefits such as PMI. In them, employers should include non-financial perks that enrich and improve employees’ work-life balance or personal development,” he adds.
The trouble is that what constitutes a reward is a subjective matter. Some employees might place a monetary value on being able to pick their own laptops, while others may be offended that their employer seems to be passing off an essential tool of the job as a benefit.
Another tricky issue is that total reward statements typically detail the cash value of each perk, depicting how the total package is made up with a pie chart. For non-traditional perks, attributing a cash value can be tricky, says How. “It’s difficult to put a cash value on some rewards, as the value to an individual can vary according to their circumstances,” she explains.
If employers can’t put price tags on their non-traditional rewards, they need to find other ways to communicate their value. Gareth Ashley-Jones, head of flexible benefits at consultancy Aon, says: “A monetary value can obviously be placed on the financial aspects of total reward and displayed in a total reward statement for employees. But when it comes to less tangible rewards, employers find it difficult to communicate value.
“Examples of this include empowering employees to tailor their work and surroundings to meet their own needs.”
Frequent communication of reward is a must. “It is important that the message is regularly revisited. Communicating total reward should not be a matter of an annual ticking of boxes, it should be a planned drip feeding of information throughout the year,” says Ashley-Jones.
He recommends sending out hard-copy newsletters and brochures outlining rewards. Face-to-face communication is also effective, especially when hiring staff and during annual reviews, while discussion forums are another option.
Employers can use employee case studies to bring non-traditional benefits to life. “Find employee champions and include their experiences of working for the organisation in company newsletters and on the intranet. Encourage them to shout about how total reward has changed their life in a positive way, be it through compressed working hours, picking their own laptop or learning and development support,” adds Ashley-Jones.
“Total reward may mean different things to different people – one person may value a choice of laptop whereas others may see this as an abdication of a business decision, so bringing out individuals’ experiences and feelings is important.”
Therefore, it also makes sense to tailor total reward communications to individuals. James Crossland, business development manager at software firm Northgate Information Solutions, says: “Employers must understand the audience that they are targeting. Every member of staff has a different set of circumstances. For a message to get across, it needs to be simple and tailored.”
It is also essential to practice what you preach. Workplace engagement factors should be well established before you put them on statements, says Malcolm Higgs, director of the school of leadership, change and HR management at Henley Business School. “An important component of total reward is the working climate. If an organisation wants to create a positive work experience for its employees it should focus on improving flexible working and career opportunities. That is more important than structured communication. While communication is important, the behaviour of line managers plays a critical role in ensuring that messages are aligned with what employees experience,” he adds.
Case Study: Hotels group trials total reward statements
InterContinental Hotels Group (IHG) is trialling total reward statements to help staff appreciate the true value of its benefits.
Dave Lawrence, vice president, compensation and benefits, Europe, Middle East and Asia at the group, says: “The biggest challenge facing any total reward programme is helping employees understand and value the rewards being provided to them.
“One way to encourage greater understanding is to provide an annual rewards statement that shows this value. This type of approach can be motivational for staff and also act as a retention tool.” Employees at IHG get more than just money. There is a flexible hours programme whereby staff are free to work early or late, so long as they are at the workplace between 10am and 4pm.
During a recent head office relocation the company made sure that it created an inspiring office space for staff. “Our working environment has been designed to reflect the needs and desires of our employees. As part of the design process, employees were given the opportunity to make suggestions for the new office,” says Lawrence.
The group, which has 7,600 UK employees, offers a plethora of other perks including company cars, a discounted room rate at group hotels, a free on-site gym at head office and meals while on duty.
Case Study: Beyond traditional perks†
Buckinghamshire County Council understands that it takes more than pay and traditional perks to get employees fired up.
The council’s total reward strategy encompasses everything from training to the working environment as well as old favourites such as pensions, childcare vouchers and company cars.
Motivation is about more than just pay and bonuses, says Debbie Cairns, group HR manager at the council, which has 14,500 staff, including 10,000 in schools. “We look at various engagement factors over and above basic pay and benefits. We include flexible working, a development agenda which includes on and off-the-job development, and out-of-work learning opportunities, career breaks and sabbaticals,” adds Cairns.
Buckinghamshire was one of the first councils to consider trialling total reward statements.
“The statements quantify people’s full packages in financial terms. If the pilot is successful we hope to provide them on an annual basis for employees from next year,” says Cairns.
The organisation measures the success of its total reward strategy with annual opinion surveys. Employees answer questions on subjects such as the working environment and work-life balance, providing a steady stream of feedback.