Category All, Best Practices How Your Enterprise Benefits From a Total Rewards Strategy It’s no secret that companies are struggling to keep their top talent from leaving. A report from Founder’s Circle found that roughly 1 in 4 startup employees will leave the company within a year. March 15, 2022 By Ivo Jurcic Enterprise-level businesses like Slack are more successful at retaining their employees. Slack, in particular, has a jaw-dropping employee attrition rate of only 8.5%! If there’s one thing you can learn from successful enterprises, it’s how to keep top talent from leaving your company. In this blog post, you’ll read about the importance of total rewards for your enterprise; how total rewards benefit employee retention, and how to implement a total rewards strategy for your HR department. What are Total Rewards? Total Rewards is a compensation strategy for employees of a business or an enterprise. The strategy includes financial rewards, development opportunities, and other non-monetary benefits, aiming to create a motivating work environment. It’s worth mentioning that successful enterprises also have Total Rewards departments to ensure that compensation policies are well-thought and meet employee needs. An excellent total rewards strategy will include these 6 key rewards: Compensation The compensation is a summary of all the direct ways the employee earns monetary rewards for their work. Most people focus on the fixed salary as part of the compensation, but there’s more to it. The compensation also includes various bonuses for an employee’s salary. Some examples of bonuses are: Stock options End-of-the-year bonus Christmas bonus Ideally, the compensation will provide a powerful monetary incentive for the employee, but it’s not the most critical aspect of the total rewards strategy. Employment Benefits Benefits cover all the non-wage forms of compensation in the total rewards strategy. They are often the determining factor when applying to a job opening because they provide a sense of social security. The most common employee benefits are: Healthcare coverage Dental insurance Parental leave Retirement plans An employee benefits survey by Clutch found that 55% of workers think health insurance is the most important employee benefit. Since medical emergencies can be extremely high, many employees prioritize benefits over the annual salary. That’s why health benefits are a critical part of the total rewards strategy. People are a valued asset. Offering these benefits and educating employees on how to utilize them is an investment in workers and in their long-term health. Lisa Oyler, HR director at Access Development Learning and Development Leading HR professionals understand employees value enterprises that invest in their skills. Professional development covers the costs of training programs and the tools employees need to improve their skills. According to a workspace report from LinkedIn, employees of companies with learning and development programs stay almost 2x longer with the company. If enterprises want to increase employee tenure, learning and development rewards are not optional. Wellbeing The total rewards strategy supports activities and practices that promote employee wellbeing outside of the company. When Deloitte asked what do employees value, 67% of survey respondents listed reimbursement for wellbeing expenses. For example, many enterprises recognize physical fitness to be an important factor in personal wellbeing. That’s why it’s not uncommon for employers to include free gym membership as part of their total rewards program. Another example of wellbeing in total rewards is the case of Salesforce offering their employees 7 days off to pursue “volunteer time off” because volunteering promotes personal well-being. Recognition Programs Recognition plays a major role in employee retention. A successful total rewards strategy has to include programs that recognize the achievements of individual employees, so they can feel valued. Some of the most popular employee recognition programs are: Promotions to more important positions Company thank you awards Achievement certificates Lunch with the CEO The Employee of the month program Think about this for a second: according to a survey by BambooHR, a leading HR software provider, 30% of employees would rather be recognized for their work accomplishments in a company-wide email from an executive than receive a $500 bonus. Yet recognition does not always have to be monetary or tangible. Verbal appreciation can be equally effective. Simple public Slack channels where managers can share public appreciation are easy strategies to implement. Gia Ganesh, Vice President of People and Culture at Florence Healthline However, it does not mean you shouldn’t have monetary recognition programs. Awarding an employee with a hefty bonus shows appreciation, but you have to do it publicly. Performance Management Performance management is a set of practices that ensure employees have a structured support system to help them reach top performance. The 3 phases of performance management are: Performance Planning; establishing goals and expectations for each individual employee for a set period. Task Fulfillment; monitoring how employees are fulfilling their assigned tasks. Performance Reviews; after a task is completed, the employee receives constructive feedback and improvement advice. With performance management, employees become more successful at their position; they bring more to the company and earn rewards. Why do Enterprises Need a Total Rewards Strategy in 2022? It’s hardly flash news when some article claims that more compensation equals more productivity to the workspace. Experienced HR professionals know things aren’t as straightforward. In reality, employee preferences for benefits and incentives have changed significantly over the years. A massive internal study from PwC and TrueChoice analyzed employee preferences over an 11-year period and confirmed this suspicion. Look at the chart from the study: Source: PwC and TrueChoice Solutions Since 2009, employee interest in compensation has declined continually. On the other hand, employee preferences for corporate rewards, such as training, work-life balance, and medical benefits, have grown. If enterprises are out of touch with what rewards their employees prefer, they risk losing their top talent to other competing businesses. A total rewards strategy gives enterprises a complete understanding of all the needs and preferences of their employees. More importantly, it’s the best way to ensure the plans of employees are aligned with those of the enterprise. Find out from your employees what matters to them and build total rewards programs that provide solutions to their needs. Then, communicate the connection between employee input and company offerings early and often, so they feel connected to the process. Aaron Cleavinger, Managing Partner at Murdoch Mason Executive Search Group Here are the most important benefits of implementing a total rewards strategy: Your enterprise will attract the most talented workforce Your employees will be fully engaged be more productive You’ll keep your top talent from leaving Reinforced alignment between employee and enterprise goals How Total Rewards Boost Productivity During the Pandemic Unfortunately, the ongoing pandemic has made things difficult for enterprises and large businesses. Besides various forms of operations disruption, employees are having a hard time keeping themselves productive. Many workers have become sick, or experience excessive amounts of stress, both in their private and professional lives. However, despite the rise of inflation and reduced revenue, industry leaders in total rewards are stepping up. A survey by Gartner found out that 68% of organizations have added or increased at least one reward to help their employees. Source: Gallup Industry leaders have identified mental wellbeing as a top priority, with 32% of organizations adding new ways for workers to access mental healthcare services. The second most popular reward was hazard pay, which 20% of organizations added to their total rewards strategy despite tighter budgets. This reward is set to recognize employees putting themselves at risk during on-site operations. Finally, 14% of organizations with total rewards strategies increased their child care support services. For example, Wells Fargo is reimbursing employees $100 each they use child care through the provider Bright Horizons. Leaders in total rewards expect to make a positive impact on employee productivity with these additions to their strategy. Steps for Implementing a Top-Notch Total Rewards Strategy Writing a total rewards strategy is a data-driven process that aims to understand the needs of your employees so you can offer them competitive rewards. These steps will give you a sense of direction and guide you in the process. Step 1: Assess Your Rewards Strategy Your enterprise is likely to have a compensation and benefits package already. Before you create a new total rewards strategy, set a team of HR experts to assess the effectiveness of your current rewards package. The goal is to identify which rewards successfully motivate your employees and which rewards are inadequate. For example, let’s say you’re offering a monthly bonus to your sales staff if they exceed the sales quota. However, few employees reach the monthly quota. The reasonable thing to do would be to increase the monthly bonus to provide more incentive for your salespeople to sell more. It’s critical to survey your employees to get a ground-level view of your compensation package. The feedback will help you decide which incentives to introduce to your total rewards strategy. At the end of this step, your assessment team must report on the effectiveness of your rewards strategy and recommend additional incentives. Step 2: Design the Rewards Outline Once you’ve analyzed your former rewards and gathered feedback from employees, it’s time to design your total rewards strategy. In this phase, your goal is to define all the monetary and non-monetary rewards your employees will earn. These rewards include: The compensation package Benefits Learning and Development Wellbeing Recognition programs You must also closely determine the criteria for earning rewards. For instance, if you added an employee of the month program, define what qualifies a worker for that reward. Step 3: Execute your Total Rewards Strategy After writing down your total rewards strategy, it’s time to put it to action. In this step, it’s critically important to communicate new reward policies to your employees. You can’t expect your workers to take full advantage of the total rewards strategy if they are uninformed. We’re providing the right set of information across payroll, health, and wellness into one concrete, personalized platform, so that you as an employee, whether you make $40,000 a year or $100,000 a year, can make the right trade-offs and decisions. Stephan Scholl, CEO of Alright Ideally, your employees will have multiple sources of information about the TR strategy, such as: HR meetings Onboarding programs An employee experience platform For the total rewards strategy to be effective, it’s paramount that all your employees are informed. Step 4: Measure the Effectiveness of Your Total Rewards The last thing to do when implementing a new total rewards strategy is to monitor its results. The goal of this step is to compare the yielded results of your TR with the results you set as a benchmark for success. This enables enterprise decision-makers to check whether the new total rewards approach has succeeded or if it needs more improvement. Back to You Understanding the concept of total rewards isn’t an easy task, but you did it. Enterprises are struggling to keep their top talent, but having a reward strategy for retaining them is a lifesaver. In this blog post, you’ve learned: What are Total Rewards? Why do enterprises depend on them? How to implement a Total Rewards strategy for your business or enterprise? Reflect on what you’ve learned today and think about ways to improve your employee experience with your new insight into total rewards. Until next time!