Complete Guide to HR Strategy: Total Reward Management (With Examples)
Rewarding employees well is a no-brainer to keep them within your organisation.
In the past, salary was the reward that attracted candidates to a role, but now the concept of total reward management is more widespread. The alignment of these strategic rewards can transform the workplace, so they should have an important place within your HR strategy.
In this guide, we’ll take you through creating a total reward strategy and how this should work in the context of your overall strategy document.
Examples of Total Reward Strategies
Total reward strategies should be people-centric and focus on the rewards that are useful for your particular team. Not every policy will work in every workplace, as they should be tailored to the individuals and organisations that they exist to support.
Not every member of staff will want to take advantage of every reward that you could offer. For example, a member of staff without children wouldn’t be interested in a childcare scheme. These rewards should be designed in such a way that they’re flexible and represent each member of staff individually.
To ensure that these perks are accessed fairly, some employers give employees credits and members of staff can combine these to access benefits that are useful to them. Others place a cap on the number of these that can be accessed through the year, ensuring that all employees get equal financial value from these benefits.
Attempt to give as much flexibility as possible within these benefits to allow employees to have autonomy when selecting the most appropriate perks for them.
Access to Professional and Career Development
The opportunity to develop and progress makes a position much more rewarding. Stagnant roles can detract from the workplace, as employees naturally become demotivated.
Giving employees access to qualifications, working on PDPs, and showing routes for progression makes for a more satisfying role. This should be tied to performance too, which can give a productivity boost to an employee with loftier goals in the organisation.
A Challenging Role
Balancing monotony with burnout is important, as a challenging role is important for employee satisfaction. Employees should feel challenged in their day-today role, with a support network to fall back on when they require further help.
This comes down to the design of the job role and the employee, as each employee will have differing strengths and weaknesses. Employees should also have mentors and teammates that they can call upon during stressful times to achieve this balance.
Within the context of your strategy, this may mean splitting roles that are gathering responsibilities or adding new employees to a team with a large burden. Some employees may also require more responsibilities to ensure that they are challenged and engaged.
Freedom and Autonomy
The ability to take responsibility for their role is important to employees. Where possible, they should be given freedom and autonomy to work within their role.
Measuring the results, rather than the means to getting there, gives the employee to maintain or improve their performance by managing their own processes. If one employee thrives under this system, then it’s also worthwhile understanding how they manage their time and inviting them to share this with their colleagues.
This should be instilled within company values, as it’s preferable to treat others as though they can manage their own schedules until proven otherwise.
Recognition of Achievements
High performing employees can easily become disengaged if there’s no culture of recognition in place.
Taking time to thank employees and recognise them keeps them on the right path. If they don’t believe they’re being recognised, then there’s little incentive to continue going over and above.
Think about the way that the employee would like to be recognised; not everyone wants to stand up and be applauded during a meeting. Incentivising other employees to attain this recognition can also boost their productivity.
This doesn’t need to be as rigid as an Employee of the Month scheme and you certainly don’t need to wait until annual reviews! Consider additional incentives for high performing employees, such as extra holidays and gift cards.
Preferred Office Space or Equipment
The employee experience can be greatly impacted by the environment and equipment that the employee works with. This can be limited by resources, as you can’t give every employee a brand-new computer and a desk with a view.
However, you can work to make improvements to their day-to-day working lives. Improving the workspace is a long-term part of the HR strategy and should be open to suggestions from employees. Within your strategy, you should set aside a budget for new equipment and for workplace improvements.
Coffee machines, artwork, greenery, snacks, standing desks and other improvements can be considered as a reward for employees. Align this with the organisational goals in your strategy; if the company is planning to increase their headcount or create a new department, then think about how this will impact the existing workplace.
This may require some liaising with other departments, such as IT and facilities. This is a great way to break out of the HR silo and act as a strategic partner within the business.
With a whopping 83% of UK adults stating that their workplace is unpleasant, creating a fantastic environment really goes above and beyond.
Capacity to Raise Matters of Concern
This is becoming an ever more important part of the employee experience, as whistleblowing and gag orders have been hitting the news. Employees must feel comfortable and able to report issues to be happy in the workplace.
Although this may seem like a given, it’s part of the reward ecosystem that should be accounted for within your strategy. Create strategies to assist in making an open culture to ensure that employees feel like they have this ability.
Legally, the organisation has an obligation to police behaviour after whistleblowing to prevent retaliation. If employees retaliate against a whistleblowing employee, then the organisation can find itself in legal trouble.
Outlining the measures that exist to protect these employees will also make them feel more comfortable. Adding a continued commitment to your HR strategy means that it will get the attention it deserves year on year.
From adding these values into the onboarding process to yearly reviews, make this policy a real talking point within your department and beyond.
Involvement in Decisions That Affect the Way Work Is Done
Employees can struggle with unilateral changes that affect their day-to-day role. If you anticipate these changes within your HR strategy, you should seek to involve these employees within them.
The use of AI is one of the biggest changes coming to the workplace, and over the course of your strategy you’ll consider the impact that it will have. This should include consulting with those that do the roles that AI will augment.
If you’re planning a new system or practice that will impact employees, it’s important that they feel heard. This kind of understanding and respect is very much part of the rewards structure, as it can be difficult to find another employer that represents the same values.
Flexible Working Hours
The ability to work flexibly is one of the top priorities for UK jobseekers. This type of flexibility can also save an employee a significant amount of money per year, which would otherwise be used on transportation to get children to school, time off for appointments and other commitments.
It’s hard to put a monetary value on the practice of flexible working, as there are many ways in which this can come in handy. This should also play into giving employees more autonomy, as they have more control over their schedule.
This can take a long time to fully implement, as these changes must come from the top down. Therefore, a timeline should be laid out within your strategy guide. Some companies choose to start this with a trial period to assess its impact on the workforce.
Opportunities for Home Working
Home working goes hand in hand with flexible working and is a natural next step for organisations that trust their staff. As well as managing their schedules, many employees have the ability to manage where they work.
This saves them time and money commuting, which also saves the employer money on office space too. Fully flexibility in where and when they work is invaluable for many employees, which is a reward that they would not consider giving up.
A flexible home working policy can help your organisation to attract talented top performers that aren’t being served by other companies’ policies.
Those that are returning to work after the birth of a child, those with disabilities, and those that are neurodivergent can be greatly incentivised by the ability to work from home. This is a fantastic talent pool that may not be able to work in a traditional environment, so don’t miss out on these employees.
To champion their remote working technology, BT implemented a new flexible working initiative for their members of staff. This grew to allow 70,000 members of staff to work from home.
They aimed to attract new talent and show companies that their infrastructure was more than capable of allowing masses of employees to complete work where they want.
- Greater productivity, with some employees achieving a 20% increase in productivity when working from home.
- Sick leave reduced by 63% among home workers.
- Over €725 million saved in rent of office spaces.
- 300,000 fewer face-to-face meetings, saving over €38.6 million per year.
While workplace pensions are a legal requirement, this does have a part to play in the rewards package. Going over and above the minimum requirements show employees that you’re committed to their happiness.
A generous pensions package can be highly lucrative to professionals, as there’s an increased spotlight placed on this. There’s a greater understanding of the workplace pension since mandatory schemes have been put in place.
Salary Sacrifice Schemes
Giving employees the option to use their gross salary towards perks in a salary sacrifice scheme can be very helpful. They can use these funds towards childcare, cycle to work and other schemes – which also allows the employer to save money on contributions too.
These perks should be explained fully to employees, outlining the benefits for them and discussing how it will impact their finances. These can be appreciated when offered flexibly with full terms available before they choose to opt in.
Equal Rewards Packages for Different Workers
Not all job roles are created equal, but each high performing employee should be able to experience a similar level of reward.
This may mean that you tailor your rewards strategy to include different rewards for different teams. For example, retail workers have to be physically present in the workplace and generally work on set shifts, so they may not be able to work flexibly or at home. However, these workers could benefit from further recognition, better contributions and the ability to select suitable shifts.
Be ready to be adaptable with these rewards, and if new technology allows more people to take advantage of these perks then you should research this.
Managing Reward Risk
There are risks to offering rewards to employees, as highlighted in CIPD studies. Actively managing these risks through the strategy will determine how successful you can be.
One of the biggest risks to be aware of is reward discrimination, which can come into play in your strategy unconsciously.
Regular evaluation will ease this risk, as you look for areas in which these could be improved. For example, managers may subconsciously recognise those that mirror their own personality traits as high-achievers. To mitigate this, you may use panels to identify these employees and pool different perspectives on individual employees.
Too much choice can also be confusing for employees, so attempt to break the different elements of the strategy down as much as possible for them. They should be made aware of the types of benefits that they are entitled to and the full scope of what this means for their monthly pay.
Communication and Employee Engagement
Taking the time to ensure that employees understand their benefits package means that more employees will take advantage of and appreciate these perks.
70% of HR professionals reported that few of their employees understood their rewards strategy and policies. 56% of those surveyed also stated that their rewards communications were not effective, with 44% of them planning to make changes to these communications as a result.
Without factoring in time and plans to distribute that information, it’s less likely that employees will understand the additional value that the employee is offering. Managers should also be encouraged to take advantage of these benefits, as they should lead their direct reports to do the same.
Designating champions and points of contact for these schemes can also be beneficial to the workforce at large.
They may not want to bother colleagues in HR or not know who to turn to with a query about a benefit. Whereas if you designate a flexible working champion, they know exactly who to turn to with their questions.
Finally, many companies choose to give their employees total remuneration statements at the end of each fiscal year. These include their salary and benefits that have a monetary value, to show a complete package of rewards.
To increase awareness and engagement with their total rewards strategy, Unilever worked to create a personalised Total Rewards Statement for all employees. This took into account all perks for members of staff in 96 countries.
They localised this rewards platform to each of these countries, with personalised displays for each employee. This self-service portal made it easier for employees to use the rewards that they were entitled to.
- Approximately 6,000 employees using the platform.
- Additional feedback from surveys within the platform.
- Senior executives reported that the new communication method was engaging and impactful.
Feeding Rewards into Recruitment
As well as keeping your top performers happy, your rewards structure should also be used to bring in new talent to the organisation. This requires clear communications about these rewards, which can play a starring role in open job listings.
More and more often, job seekers are looking for these perks while deciding whether to submit their application. Employers recruiting for high-level roles or for large numbers of new members of staff can find that this makes a real difference when it comes to the applications they receive.
Outlining these rewards and their place within organisational values shows candidates that there’s a commitment to employee happiness in the organisation.
Monitoring the Outcomes
As with any HR initiative, it’s essential to monitor the outcomes that are created by your total rewards system. Within the HR strategy document, you should outline timelines and methods by which you’ll report back on these rewards.
There are several KPIs that you can use to determine if this is successful and where room for improvement exists.
Uptake Rate of Perks
The percentage of staff using these perks can be indicative of success. If there’s a low uptake of certain perks, they may not be as popular or fully understood by staff.
Keep records of the rewards that are being claimed; some automated rewards software will do this for you. Over time, these trends may change and there may be room to clear out perks that don’t resonate with staff. You can also maximise popular perks to ensure that these are given pride of place.
Cost to Organisation
Different perks will incur different costs for the organisation; it's important to weigh these against the gains. Some of net gains and expenditures will be simple to work out, as the perk incurs a direct cost, but others have fewer tangible costs.
Begin with those that have a direct cost, such as subsidised gym memberships, staff discounts and vouchers. Then, assess the impact that non-monetary perks have, like pro rata costs of additional holidays or any costs associated with flexible working software.
Offset these with any net gains that are incurred as a result of the perks, like decreased rent costs as a result of fewer staff working in the office. Consider reduced costs from a lower staff turnover and any productivity gains to get a full picture of the numbers.
Number and Quality of Applications for Vacancies
Taking a look at the number and quality of applications that the organisation receives in the recruitment process can also be helpful to assess the impact of these perks. Particularly with challenging roles to recruit for, the addition of these perks in the job description can give you an influx of qualified candidates.
The easiest way to assess this is to group similar jobs together, then compare applications before and after the implementation of the rewards system. Score the quality of the applicants, as well as the number, to build up a full understanding of how these perks are impacting candidates.
Staff Turnover and Engagement
The happiness of staff can have a tangible impact on the bottom line of a business. A lower staff turnover saves in recruitment costs and lost productivity. Engaged employees will also be more productive, which gives another net gain to the business.
Conducting your own research into the average staff turnover at different stages in your strategy will show how it is impacting the workforce. Assessing engagement can come in the form of anonymous surveys and monitoring employee output.
Staff Attitude Towards Perks
Encourage staff to be vocal about the perks they like and dislike, as well as any roadblocks to their use.
For example, if one department is not using their flexible working allowance, then their manager may hold more traditional attitudes that make it difficult for staff to access this perk. You won’t know about these issues unless you create an open environment to discuss them.
Again, anonymising the feedback method may help you to get more accurate results. Ask staff to report on the usefulness of these perks, how often they access them and the impact they have on their working lives.
PR and Brand Awareness
Positive PR and brand awareness can also result from a strong total rewards strategy. Publications can pick up quirky or generous rewards strategy, which raise the employer profile of the organisation.
As well as helping to bring in qualified candidates, this also impacts the customers that frequent your organisation.
Whether these are individual shoppers or high-level clients, many of us prefer to do business with organisations that value their staff. 87% of Starbucks customers stated that their affinity is driven by the way that this company treats its staff!
Examples of Total Rewards Strategy Plans
As you create a total rewards plan, you may want to check out these examples to get you started. Remember, there’s no one-size-fits-all approach for this, you have to work with the resources you have and the rewards your people want.
No matter how you choose to incentivise and reward your people, ensure you’re offering a comprehensive total rewards package. Then, monitor how this impacts the employee experience and improve it to retain your top performers in the long run.