The first step toward understanding and communicating the value of total rewards is defining the term “total rewards.” Think of total rewards as all the tools available to the employer to attract, motivate, and retain employees. Total rewards include everything the employee perceives to be of value from the employment relation-ship. Smart employers use this “whole package” concept to attract and obtain new talent.In the current job market, workers have come to expect more from their potential employers than competitive wages. When considering a position, most employees will ponder the total rewards affiliated with the offer. Total rewards can comprise wages, time off, a flexible schedule, group benefits, work environment, work culture, and many other things. The considerations will differ by employee, because different employees want and value different things.
The five elements of total rewards
Generally, a total rewards package contains five elements:
- Cash Wages.
- Group Benefits. These include health care, retirement benefits, and paid time off.
- Work-Life Benefits. These are the practices, policies, programs, and philosophies that make up or affect the work environment and the employee’s ability to satisfactorily balance work and home responsibilities.
- Performance and Recognition. Performance and recognition practices/policies drive how overall performance is assessed and the recognition given for good performance.
- Development and Career Opportunities.
Focus on the whole package
In the past, the most commonly addressed of the five elements was wages, because first, wages are fundamental to the employment contract and second, it’s easy to assign a specific value to cash. In many cases, cash is the first point of comparison for the candidate looking at a potential new role, whether the candidate is weighing the role against his or her current job or evaluating two potentially new roles against each other.
However, it’s important to not get lost in the quantifiable and really focus on the offerings your company has within the other four elements. Sometimes those elements can be more important than pay. For example, with rising healthcare costs, healthcare coverage is the most important group-benefit element for some. For others (like your “go-getter” candidates), room for potential career advancement is a must.
Communicate the package
But even if you don’t, it’s essential to have a good idea of your company’s total rewards package, because the more you know the better able you’ll be to discuss with candidates the elements that’ll resonate with them most. This is particularly important if you have great benefits and a fantastic work culture but your wages only meet or maybe even lag the market.
Finally, an employee who is well informed about the total rewards going into the job is likely to be more satisfied down the line than one who isn’t. Informed employees experience less unwelcome surprises and are able to ease into their new role more smoothly and with a good understanding of all the benefits of working for their companies.
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