Total rewards: What it is, Benefits and Strategies for HR

In an ideal scenario, an employer finds and hires the perfect candidate, and the employee eagerly begins their dream job. In reality, employee satisfaction hinges on more than just the duties of the role. Although a sense of purpose and belonging will capture a candidate’s interest, it’s often the fine print that sways them to sign on the dotted line.

Job seekers, independent contractors, and full-time employees are concerned about more than a competitive base salary. Today’s workforce is interested in a total rewards package that includes fair compensation, non-monetary employee benefits, and a culture that promotes work-life balance.

A comprehensive total rewards strategy requires you to tick off many of those boxes. Not to worry—our guide explains everything you need to make employees feel valued, supported, and eager to excel.

What is a total rewards strategy?

Businesses implement a total rewards strategy to compensate and motivate their employees. A total rewards program is designed to benefit the workers first, but it also delivers organizational benefits.

Total rewards encompass various compensation strategies, benefits, and rewards employers offer employees. Here’s what to include in a total rewards package:

1. Compensation: Tangible financial rewards are the foundation of a total rewards strategy. A total compensation package may include a base salary, stock options, bonuses, incentive pay, and any other direct financial payments employees receive or have the potential to earn.
2. Benefits: Nonwage perks support employees’ well-being and financial security. The best employee benefits include nonwage perks, such as health insurance, life insurance, retirement plans, disability insurance, and paid time off (PTO). Robust benefits packages contribute to team members’ quality of life outside of work, increasing loyalty and overall job satisfaction.
3. Career development: Some perks focus on fostering employees’ skills, knowledge, and career advancement. Development opportunities (e.g., mentoring, training workshops, and tuition reimbursement) demonstrate a commitment to personal and professional growth, attracting prospective employees and improving employee retention. 
4. Recognition and rewards: Workers appreciate formal and informal recognition of their achievements and contributions. These may include employee reward programs and performance-based incentive pay. Acknowledge and celebrate employees’ achievements and contributions to reinforce good behavior and motivate continued performance. 
5. Work-life balance: Many organizations adopt initiatives that help employees manage their professional commitments alongside personal responsibilities. Flexible work schedules, gym memberships, parental leave policies, and employee support services promote well-being and reduce burnout, improving the overall employee experience.
6. Work environment: Benefits may contribute to a positive workplace culture via inclusive policies, special employee discounts, team-building activities, and in-house wellness programs. A healthy work environment fosters a supportive culture where employees feel respected, motivated, and eager to share.

What are total rewards statements?

A total rewards statement provides an overview of a worker’s compensation package. This personalized statement outlines base pay, bonuses, incentives, benefits, and other perks. By presenting this information in a transparent and intuitive format, total rewards statements help team members understand the complete value of their compensation.

A total rewards statement also helps leadership understand all expenses associated with maintaining its workforce.

Benefits of implementing a total rewards strategy

Employees aren’t the only beneficiaries of a total rewards strategy. Employers who work hard to develop an effective, flexible rewards system will be paid back with deeper employee morale, motivated workers, and an organizational culture that encourages long-term loyalty and success.

Here are more advantages of a total rewards strategy:

1. Attract and retain top talent

A total rewards program that offers competitive compensation, attractive benefits, and opportunities for career growth will attract top-tier candidates and retain star employees. In a fierce job market, a strong compensation strategy can keep the competition from poaching your workforce.

2. Enhance employee engagement

A total rewards program boosts employee satisfaction by recognizing and rewarding employees for their contributions. Employees who feel valued and appreciated are more motivated, committed, loyal, and productive.

3. Foster a positive work culture

Total rewards programs contribute to positive work environments by promoting fairness, transparency, and recognition. Visible opportunities for collaboration and recognition encourage teamwork and a sense of shared accomplishment.

4. Increase employee productivity

Employees who are satisfied with their compensation and benefits are more likely to be productive and efficient. Benefits like incentive pay, stock options, and retirement plans give employees a reason to stick around for the long term, aligning their efforts with company goals.

5. Support employee well-being

Total rewards encompass not only financial rewards but also health and wellness benefits. Comprehensive healthcare coverage, work-life balance initiatives, and employee assistance programs build an organizational culture that supports employees’ physical and mental well-being.

These benefits are more than just perks—they can also help reduce absenteeism and boost productivity.

Employee total rewards best practices 

You’ll need to cross lots of t’s and dot plenty of i’s to implement a global total rewards strategy. Here are a few best practices for HR professionals to consider:

1. Learn what benefits interest your team

Your organization has goals for its workforce, such as improving teamwork or increasing employee retention. Your employees also have goals, like boosting their retirement savings or learning new skills. The only way to understand what motivates your employees is to ask them. Surveys, all-ins, and one-on-ones are great methods to align your total rewards strategy with the most impactful rewards and benefits.

2. Be transparent about the program’s benefits

Your organization’s benefits package is a golden ticket for attracting and retaining talent, but only if you approach it transparently. Employees should clearly understand all available perks and benefits. Openness builds trust and empowers individuals to make informed decisions about their career paths.

Many companies share total rewards options quarterly or annually for benefits that require sign-up (e.g., mentorships, tuition reimbursement, professional development workshops). Managers should make a habit of providing hard copies or email blasts and discussing specific benefits at annual performance reviews prior to enrollment.

3. Clearly communicate the strategy to your employees

Informing your employees about the available benefits is just half the battle. The other half is clearly explaining the strategic rationale behind each benefit, whether it’s a mentoring program or free gym membership. Illustrate how each offering supports personal growth and job satisfaction to create a culture of care, attention, and belonging.

4. Categorize your statements 

Extensive rewards programs can be overwhelming to sift through. Break up rewards into clear categories to improve readability for employees. Likewise, categories help HR professionals identify any gaps in the program. The following five categories work for most organizations:

• Benefits
• Work-life balance
• Performance and recognition
• Compensation
• Employee development

Empower your global team with Oyster’s Total Rewards

Oyster’s Total Rewards gives employers access to the tools and insights they need to manage and optimize employee compensation and benefits packages around the world. As a leading global employment platform, Oyster streamlines the process of building and implementing locally compliant total rewards packages, including salary, benefits, and equity, so you can attract and retain top global talent.