As with all competitions, the key to coming out on top in the battle for the best workers is differentiation. The employers that do the best job at communicating what sets them apart from and above other organizations consistently get the best talent - it's as simple as that.
One way employers try to do this is with compensation. Offering the largest salary is certainly a compelling way to ensure that a job offer makes it to the top of a candidate’s list, but it isn’t the only way. More and more organizations are choosing to reframe their traditional compensation and benefits packages as total rewards as a way to better communicate the value of the compensation, benefits, rewards and other perks they offer employees as a way to distinguish themselves as “employers of choice.”
How moving to a total rewards mindset can help employers stand out from the competition:
What does total rewards compensation mean?
The term “total rewards” might be a bit new to some, but the concept is anything but. The elements that make up a total rewards package are things most employers already offer: base pay (either a salary or hourly wage rate), stock options, health insurance, dental and vision benefits, retirement contributions, life insurance, paid time off, etc.; but also include perks like performance bonuses, company-sponsored training, employee wellness programs, workplace flexibility options, identity theft protection plans, employee discount programs - things not usually included in compensation or benefits discussions.Each of these rewards is appealing in its own right, but grouping them together and presenting them as a single total rewards package makes a much more impressive statement.
Benefits of a total rewards approach
Employers who take a total rewards approach enjoy a number of benefits, including:
A persuasive recruitment tool
Once an employer has quantified the value of its total rewards package, they can use it as a way to demonstrate the value of the organization’s benefits package while talking with potential candidates.
Increased awareness of all the benefits the employer provides
Underutilization of employee benefits is a big concern for many companies. The time, effort and resources that go into putting together an employee benefits packages (particularly for a small business) can be considerable, and when those benefits go unused, it can all feel like a waste. But the reason employees don’t take advantage of benefits is often simply because they simply didn’t know they existed. Total rewards programs help employers communicate all of the benefits and perks that are available for employees.
Higher employee retention rates
It’s human nature to value things solely on our own personal cost. The same is true of employee benefits and other rewards. Total rewards programs allow employers to quantify the value of each individual benefit or perk, as well as the total amount the employer spends on these rewards. When employees see just how much their employer invests in them, above and beyond their paycheck, it can be an incredibly positive experience and lead to higher levels of morale and employee engagement. Engaged employees are more loyal employees, which means that it’s going to take more than a small salary increase to lure them away.
Improved performance and productivity
A more engaged workforce isn’t just a loyal workforce, it’s also a more productive one. Total rewards programs have been linked to increases in overall employee performance and satisfaction.
Implementing a total rewards program
Although total rewards programs have certainly grown in popularity in recent years, you’d actually be hard-pressed to find two that are completely identical. The greater degree of flexibility and variety that these programs offer is a huge part of their appeal – employers can customize their total rewards packages to fit whatever is most attractive or important to its specific workforce.
Of course, the virtually endless possibilities can also make implementing a total rewards program seem pretty daunting. As with most employee initiatives, the devil is in the details when it comes to implementing a total rewards strategy.
How an employer chooses to build, communicate and evaluate the success of the program are all crucial factors in how successful the program will be.
Building a total rewards program
Implementing a total rewards program doesn’t mean that an employer has to throw out any of the other rewards or benefits it’s currently offering. Employers should instead start by evaluating current benefits and perks to identify any gaps in their rewards packages. This is also a good opportunity ask employees what rewards they would value the most, either through informal conversations or by conducting a quick survey.
Broadly speaking, total rewards are grouped into one of the following categories: compensation, benefits, development and work environment. Employers should aim to incorporate rewards from each of these categories within their total rewards plan. This ensures that the program has elements that appeal to the entire workforce, regardless of generational, seniority or position-level differences.
Employers should also set some goals for the program during the initial design phase. These goals will vary depending on the motivations for implementing a total rewards strategy, but generally include increasing participation rates, improving employee job satisfaction, reducing employee turnover, etc.
Communicating the program to employees
After identifying what rewards will be included in the program, the next step is to get the word out to employees. The more employees are aware of and understand the program, the more likely they are to take advantage of it and understand the value it provides.
Employers should make effective communication a top priority of the program’s launch. Communication should be thorough and ongoing, but not overwhelming. Employers might want to consider announcing the program in person, either during a regular staff meeting or by conducting a special training dedicated to introducing the program, and then highlighting the different available rewards throughout the year to keep the program fresh and top of mind for employees.
One of the best ways to communicate the value of a total rewards program is to create and distribute personalized total compensation statements. Usually designed to look like a bank statement or paycheck stub, these statements show the monetary cost of each of the benefits the employer provided to the employee throughout the course of the year, combined with the employee’s annual compensation.
[Don't want to go through the hassle of putting together a total compensation statement every year? HR outsourcing providers like G&A Partners can take care of that for their clients.]
Evaluating the success of the program
This last stage of the implementation process is both the most important and the most often overlooked. One reason might be that conducting a thorough evaluation can seem like an overwhelming task, especially if the team isn’t sure how well the program is being received by employees, but it doesn’t have to be. Employers simply need to measure the outcomes and results against the goals set during the building phase.
The specific goals set will determine what instruments or tools employers can use to measure those results. For instance, if the goal was to increase job satisfaction, an employer might conduct a job satisfaction survey prior to implementing the program and again at the end of the year and compare the responses.
Some final thoughts on total rewards packages
Implementing a total rewards program isn’t an overnight endeavor – it takes careful planning and preparation. Once an employer successfully makes the switch to a total rewards strategy, however, the return on investment they experience will ensure they’ll never look back.
A lot of companies want to implement total rewards programs, but feel they don't have the time to research additional benefit offerings, the resources to offer more benefits, or simply just aren't sure where to start. G&A Partners can help with all three.
As part of our comprehensive outsourced HR, benefits and payroll solutions, our dedicated HR and benefits specialists can help you design an attractive employee benefits offering (often at rates much lower than you could find on your own), as well as the expertise to draft and implement employee policies and procedures that increase engagement and employee satisfaction.