I first heard the words “total rewards” when I was a wet-behind-the-ears HR communications specialist working for a big Canadian retailer. It was all about buzzwords back then, and in my youthful eagerness, I ate them up. Just when I thought I had heard them all, our senior vice-president of HR uttered this new bit of lingo.
With that two-word introduction, she launched into a 92-slide PowerPoint presentation. As I sat, glassy-eyed, through the animated pie charts, clip art and colourful graphs, it became apparent that it was going to be my responsibility to tell employees about their total rewards and to enable a kind of employee engagement nirvana.
The strategy was to educate employees about what really went into their compensation from the company. This was largely done through videos and booklets carefully explaining each component of total rewards and how they worked together to make up a robust employee offering. There was a separate booklet on each individual component: pension, base pay, bonus, employee discounts and health benefits. All in all, this was a very tactical approach to informing employees about their total rewards.
In those days of buzzwords and animated clip art, early communication objectives centred on banishing the long-held notion that base pay was all that mattered and that benefits programs were one-size-fits-all. But from a strategic HR perspective, total rewards represented a new way of thinking about the deployment of compensation and benefits, combined with the other tangible and intangible ways that companies seek to attract, motivate and retain employees.
Since then, total rewards has evolved as an HR communications strategy. Gone are expensive videos and glossy print materials. In their place? The total rewards statement. Since we first began seeing total rewards statements, they have become a proven and economical way not only to interest qualified prospects in the company and keep them engaged as they work, but also to increase participation in company plans (thus generating better returns on the company’s investment in its compensation and benefits programs) and to improve how employees perceive the value of working for their employers. In other words, it’s a way to achieve employee engagement nirvana—or, as we now call it, a total rewards culture.
A strategic approach to developing a total rewards statement—indeed, a total rewards culture—should involve four major steps: benchmarking how your employees feel about their total compensation; taking stock of all components of the compensation package; creating key messages; and measuring the program’s success.
Step 1 – Benchmark
One of the first steps in establishing a total rewards culture is strategic communication. To develop that communication, you must understand how your employees feel about the benefits and programs offered to them. The best way to find out how employees feel about what you offer today is, simply, to ask them. This can be done quickly and easily through a targeted survey and a handful of well-planned facilitated focus groups.
The data you collect will give you keen insight into how employees view the company’s offerings. This is extremely valuable information when it comes to crafting your total rewards communication, as it can tell you what—and what not—to highlight. For example, after completing a survey of 1,500 salaried employees, a company found that two-thirds of its staff did not realize that the company offered a healthcare spending account. The company made certain to highlight that account in the total rewards communication. At the next re-enrollment, there was an 80% increase in employee participation in this benefit.
If a survey is not feasible, another way to gauge employee perceptions is to look at HR data and find patterns in participation levels and benefits usage. You can also get useful insights just from speaking with managers and supervisors.
Step 2 – Take Stock
Once you have an idea of current employee perceptions, it’s time to take stock of the programs, benefits and incentives (both cash and non-cash) at your organization. These typically fall into five broad categories.
Compensation – This covers base pay, variable pay, short-term incentives and incentives over the longer term.
Benefits – The core suite of benefits usually covers medical, dental, vision, group insurance, pension and savings, as well as vacation and sick leave policies.
Work/life – Employees recognize the value of company policies and support for workplace flexibility; paid and unpaid time off; health and well-being; dependent care; financial support; community and social involvement; and management’s involvement in changing the culture.
Performance and recognition – This extends the annual performance appraisal and provides a 360-degree review of employees’ progress, as well as special incentives such as outstanding achievement awards.
Development and career opportunities – Employees also value learning opportunities, coaching and mentoring programs, and opportunities for advancement.