Creating a Total Rewards Strategy: A Guide to Attract, Motivate, and Retain Talent

How do you attract people who have more choices than ever? How do you motivate a workforce that spans generations, geographies, and expectations? How do you keep your top talent from walking out the door?

The answer is no longer just compensation. It’s about creating a Total Rewards strategy. A unified approach to how your organization supports, engages, and recognizes its people.

Total Rewards is more than a collection of perks. It’s a framework that connects what employees value with what the business needs. That includes salary and bonuses, but also well-being programs, learning opportunities, recognition, flexibility, and purpose. It’s the full package and it has become a critical differentiator in the competition for talent.

This guide explores what Total Rewards looks like in practice: the core components, the process for developing a strategy, and the best practices that leading organizations are using to stay ahead. Whether you’re building a new rewards framework or evolving an existing one, this resource will help you build a Total Rewards strategy that delivers value to your people and your business.

The Importance of a Total Rewards Strategy

Where flexibility, purpose, and growth are just as important as compensation, organizations must rethink how they attract and retain talent. Enter the total rewards strategy: a comprehensive approach that integrates all the ways a company can recognize, motivate, and support its employees.

According to the Society for Human Resource Management (SHRM), a total rewards strategy encompasses everything employees value in their work relationship. When well-designed, it creates a competitive advantage by aligning rewards with employee expectations and business goals.

Whether you’re building your total rewards strategy from scratch or refining existing elements, this guide will help you navigate the essentials and ensure your approach is employee-centric, competitive, and future-ready.

“When we talk about Total Rewards today, it’s about combining the emotional and rational connection between the employer and employee. It’s not just comp and benefits—it’s what matters to them on a personal level.”
— Jim Newman, CEO of HRIZONS, Webinar “How To Optimize Your Total Rewards Strategy With HR Tech And AI“

What is a Total Rewards Strategy?

A total rewards strategy is a structured plan that combines direct compensation with indirect benefits to enhance the employee experience and drive organizational performance. This approach goes beyond base pay to include elements like career development, well-being, and recognition.

Unlike traditional compensation models, total rewards compensation strategies focus on engaging the whole employee. According to AIHR, this model supports not just financial well-being but also psychological and developmental needs.

Total rewards strategies recognize that employees seek value in multiple forms, from the paycheck to the purpose of their work. Companies that implement comprehensive strategies are better positioned to engage their workforce, reduce turnover, and enhance employer branding.

Key Components of a Total Rewards Strategy

To build an effective employee total rewards strategy, organizations need to consider several core components:

Compensation: Base salary, performance-based bonuses, commissions, and stock options. This is the foundation of most reward strategies but should be complemented by other elements.

Benefits: Comprehensive healthcare, dental, vision, life insurance, and retirement planning options (such as 401(k) or pensions). Offering flexible and tailored benefits is especially valued by diverse, global workforces.

Work-Life Balance: Paid time off, hybrid work models, flexible scheduling, parental leave, and sabbaticals contribute to long-term employee satisfaction.

Recognition: From informal peer-to-peer shoutouts to structured awards and incentives programs. Consistent and timely recognition boosts morale and reinforces positive behaviors.

Development Opportunities: Leadership training, online learning subscriptions, mentorship programs, and career pathing initiatives show investment in employees’ future.

Well-being: Physical, mental, and financial wellness support, including access to Employee Assistance Programs (EAPs), mental health days, and wellness stipends.

These elements of total rewards strategy create a layered and resilient approach to supporting employees across various dimensions, addressing both short-term motivation and long-term loyalty.

Developing a Total Rewards Strategy

Developing a total rewards strategy requires thoughtful planning, stakeholder input, and continuous alignment with business and workforce needs. Below is a structured process:

Assess Organizational Needs and Workforce Expectations

Conduct an internal audit of current compensation and benefits. Identify gaps, overlaps, and areas for innovation.

Use employee surveys, interviews, and focus groups to understand evolving needs and preferences.

Benchmark Against the Market

Use market data from trusted sources like Mercer (https://www.imercer.com/HR-topics/HR-topics-home/Total-rewards), Radford, or Glassdoor to ensure your offerings are competitive.

Analyze competitors’ benefits and rewards to identify differentiators.

Design the Framework

Outline your total rewards pillars, matching them to business goals and employee personas.

Segment programs by career stage, role type, location, or department to ensure relevance.

Implement in Phases

Test new initiatives with pilot groups.

Ensure internal communication, manager training, and change management are part of your rollout plan.

Communicate Transparently

Create accessible materials explaining each reward component.

Use intranet portals, manager toolkits, email campaigns, and employee total rewards statements to maintain visibility.

Measure and Evolve

Use KPIs such as retention rate, eNPS, program utilization, and satisfaction scores.

Continuously solicit feedback and adjust based on business priorities and workforce needs.

This structured approach ensures the total rewards strategy development process is both methodical and adaptive to change.

Want a shortcut?

Get our 4-step roadmap to Intelligent Rewards and Recognition solution

download whitepaper

Total Rewards Strategy Examples

Many forward-thinking organizations have implemented total rewards strategy examples that reinforce business performance and employee satisfaction.

Salesforce: Combines financial incentives with generous paid time off, volunteer opportunities, and mental health days.

Spotify: Offers global fertility benefits and flexible work, emphasizing inclusion and life-stage support.

Moss Adams: Built its total rewards compensation strategy around transparency, flexibility, and well-being, resulting in improved retention.

Google: Known for its comprehensive perks, it blends compensation, innovation incentives, continuous learning, and a strong community culture.

These total rewards strategy examples show how customization and alignment with culture are key to success.

Total Rewards Strategy Template

To help HR teams structure their plan, here’s a basic total rewards strategy template:

Objective: Align rewards with talent strategy and organizational goals.

Employee Segments: Define target personas.

Components: List compensation, benefits, recognition, development, flexibility, well-being.

Delivery Mechanisms: Platforms, portals, HR tools.

Communication Plan: Internal education campaigns, 1:1s, onboarding.

Evaluation Metrics: Retention rate, program participation, eNPS.

This total rewards strategy template can be adapted by company size, industry, and talent priorities. Templates also provide a baseline for scalability, especially important for high-growth companies or those operating in multiple geographies.

Recommendations for an Effective Total Rewards Strategy

Developing a total rewards strategy doesn’t end with design. Ongoing improvement is essential. Here are some evidence-backed recommendations:

Align with Business Strategy: Rewards should reinforce the company’s purpose and direction (Forbes).

Support Personalization: Recognize that employees value different things; let them choose. For example, allow a stipend to be used for childcare or education.

Promote Equity: Ensure fairness in pay, development, and recognition. Use audits to uncover and resolve gaps.

Invest in Tools: Use HR tech platforms to manage rewards efficiently and enable continuous optimization.

Tell the Story: Help employees understand the full value of their total rewards package. Don’t assume they know; educate and re-engage often.

These insights support building a total rewards strategy with recommendations that lead to measurable results.

Ready to Transform Your Talent Strategy?

Start building your Total Rewards strategy today!

Request demo

The Strategic Advantage of Total Rewards

In a competitive talent market, developing a total rewards strategy is no longer a luxury, it’s a necessity. It helps organizations differentiate themselves, build trust with employees, and drive long-term engagement.

A well-executed total rewards HR strategy can directly impact your company’s culture, innovation, and profitability. By blending data, empathy, and clarity, HR leaders can design programs that truly matter to their workforce.

Whether you’re just beginning or looking to enhance your existing programs, a clear, data-backed, and employee-centric total rewards HR strategy can serve as the foundation of your workforce success. Start now to develop a total rewards strategy that reflects the needs of your people and the goals of your business and make it your edge in the race for talent.