The relationship between an employer and an employee is as ancient as the civilization itself. Courts of Kings and Emperors housed talents worldwide and exceptional individual performance was duly rewarded.
The motivation behind this can be explained in the words of Robert S McNamara, former U.S. Secretary of Defense:
“Brains, like hearts, go where they are appreciated.”
One of the compensation management theories also validates the need for an efficient rewards strategy for improving employee experience. The Behaviour reinforcement theory states that when a behaviour is rewarded, it will most likely be repeated.
But with the clashing priorities of Boomers, Millennials, and Gen Z workforce, how do you perfect the dynamics of your reward structure to resonate with your entire workforce?
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All Starts with a Total Rewards Philosophy.
This philosophy is a system that helps organisations translate their mission, vision, goals, and strategies into a practical framework.
This framework guides the decision-making process when it comes to designing compensation and benefits packages for employees. In other words, it outlines how a company can attract, retain, and reward its employees.
What is a Total Rewards Statement?
A Total Rewards Statement (TRS) is a quantifiable representation of the compensation value an employee derives from your organization.
In simple terms, it is how your compensation programs (spiced with elements of rewards) have raised your employee value proposition to provide growth opportunities to your employees.
There are 4 key elements of a Total Rewards Statement:
- Financial rewards – A rewards program that includes cash compensation in the form of bonuses or incentives
- Monetary benefits – Additional benefits that form a part of your compensation package, like providing health insurance, stock options, disability insurance and so on.
- Non-monetary benefits – These benefits do have a cash value conversion but have a potential impact on your employee turnover like career development programs, gym membership, tuition reimbursement, and more.
- Non-tangible benefits – This is an approach to compensation improvement through employee wellness initiatives like the emphasis on mental health, flexibility, and providing psychological safety to your employees.
While these 4 factors are the foundation on which you create your Total Rewards Statement, the rewards and benefits offered to employees differ from organization to organization based on their culture and business goals.
How to Create a Total Rewards Statement Aligned with Your Culture and Leadership Vision
Creating a total rewards statement (TRS) for your business can be a valuable tool to communicate the value of your employee compensation package. Here are some steps you can follow to create a TRS:
- Positioning: Start with a short description that explains what a TRS is, what employees can expect to see in the rewards package, and where it fits into your company’s broader employee value proposition (EVP). Use this section to confirm the value of the employee and support the key messaging of the type of employer you aim to be.
- Financial rewards and monetary benefits: Provide an overview of the financial rewards, including guaranteed remuneration, annual compensation, retirement scheme contributions, medical insurance, total performance bonus, and performance incentives.
- Shares: If applicable, include an overview of share allocations and options for the employee in the compensation analysis to show long-term value and promote retention.
- Additional information on benefits: Give more information on retirement benefits with flexible options the employee could explore. Include additional risk benefits, such as disability coverage, life insurance, and family cover.
- Leave benefits: Provide an overview of available leave and reinforce the types of leave employees have access to, such as parental leave, study leave, and sick leave.
- Long service benefits: Showcase long service benefits in the compensation cycles and explain when the employee would qualify for these additional benefits.
- Learning: Outline learning opportunities available to the employee, specifically focusing on where employees formed part of learning initiatives. This could include e-learning licenses, learning programs attended, and bursaries.
- Employee offerings and services: Provide an overview of other services available to the employee with links to access these services. These could include gap cover services, employee assistance programs, sports and social clubs, and daycare.
- Legal T&Cs: Finally, ensure that employees are aware of the TRS’s applicable legal terms and conditions, including data integrity and where to find additional support to better understand these benefits.
By following these steps, you can create a comprehensive TRS that effectively communicates the value of your employee compensation package.
How Beneficial is Including a Total Rewards Statement for an Organization
According to a study, around 40% of employees do not have clarity on what are total rewards, and 38% of them do not understand the components of their pay slips. Your employees are the most crucial part of your business strategy and the leverage to crush your organizational goals. So, it is utterly important that they have a comprehensive view of the value they are getting out of your compensation strategies.
Let’s have a look at the 3 key benefits of a Total Rewards Statement
Employer of Choice
With candidates and employees comparing employee value propositions and sharing their experiences on public platforms like Glassdoor and LinkedIn, it’s more important than ever for organizations to effectively communicate their value offerings.
Total Rewards Statements help organizations showcase their employer brand in an authentic and tangible manner, creating real insight into the rewards they offer to employees. It’s not just about the rewards themselves, but also how they are managed and perceived by employees.
A Solid Employment Relationship
With the rise of the Great Resignation, helping employees understand the value of their employment relationship has become more crucial than ever.
Total Rewards Statements have been gaining popularity for years, but recent events have highlighted their importance even more. TRS is an effective tool for showing employees the holistic value of working for an organization.
It can influence employees’ perceptions of what their organization truly offers beyond just their salary.
For example, your might be providing a base salary that is satisfactory according to the industry standards. Now, you change the game by providing subsidized medical insurance, pension fund contribution, subsidized meals, and flexible working options to your employees and that makes your compensation competitive in the labor markets.
Personalized Options for Employees
As the employee experience movement gains traction, personalizing rewards has become increasingly important.
Regardless of your organization’s stance, a Total Rewards Statement offers an opportunity for employees to customize their reward package to suit their needs.
By highlighting the choices available within traditional rewards, such as pension fund contributions, medical insurance, and salary composition, a TRS creates a sense of personalization for employees. This empowers them to make informed decisions about their benefits and helps them feel valued and supported in the workplace.
In conclusion, creating a Total Rewards Statement can bring numerous benefits to an organization. It is a tangible projection of your total rewards philosophy. By defining and communicating the organization’s overall approach to rewarding employees, a TRS can help attract and retain top talent, align employee behaviour with organizational objectives, and foster a culture of transparency and trust.
Additionally, a Total Rewards Statement can serve as a roadmap for making decisions around compensation, benefits, and other rewards, and can help ensure that those decisions are consistent and equitable. While there is no one-size-fits-all approach to developing a TRS, organizations that take the time to carefully consider their unique needs and values will be better positioned to reap the rewards.
Imagine the ease of creating a Total Rewards Statement that provides you with real-time compensation data that helps you understand the industry benchmarks.
You would be able to study the trends in the total rewards landscape, understand the fluctuations happening in the compensation and benefits industry, and create compensation plans that would immensely benefit your employees.
HireSure.ai brings you CompUp, a competitive compensation and appraisal planning platform that leverages dynamic compensation data to help you become an employer of choice for your employees.
Go ahead, and design a rewards strategy that is both appealing and rewarding for your employees using CompUp’s cutting-edge solution.
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