Resources Blog What is Total Rewards? A Complete HR Guide to Programs, Packages, and Strategy 
Recognition and Rewards

What is Total Rewards? A Complete HR Guide to Programs, Packages, and Strategy 

Author: Kristina Mishevska Last updated: June 11, 2025 Reading time: 6 minutes

As the expectations of today’s workforce evolve, HR leaders are rethinking how they attract, engage, and retain top talent. Gone are the days when salary and a standard benefits package were enough. Employees now expect meaningful recognition, flexibility, personal growth, and well-being support as part of their employment experience. 

This is where Total Rewards comes in. More than a buzzword, Total Rewards is a comprehensive framework that addresses the full spectrum of what employees value and what drives business outcomes. Understanding this concept is key for HR teams looking to build competitive, high-retention workplaces. 

What is Total Rewards? 

Total Rewards refers to the complete package of both monetary and non-monetary offerings that an organization provides to employees in exchange for their work. It combines direct compensation with indirect rewards to support the employee experience more holistically. 

According to Gartner, Total Rewards typically include: 

  • Compensation (base pay, bonuses, commissions) 
  • Benefits (healthcare, retirement, insurance) 
  • Recognition and rewards (spot bonuses, awards, peer recognition) 
  • Well-being (mental health support, flexible schedules, remote work) 
  • Development and career opportunities (training, promotions, mentoring) 

The goal is to address not just financial needs, but also career aspirations, lifestyle balance, and emotional drivers. A well-crafted Total Rewards strategy aligns the interests of the organization with those of its people, creating a win-win dynamic that fuels performance and loyalty.

 

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What is Total Rewards in HR? 

From an HR perspective, Total Rewards is a strategic tool to boost performance, engagement, and retention. It helps HR teams: 

  • Align employee motivation with business goals 
  • Personalize the employee experience 
  • Build a stronger employer brand 
  • Support equity, inclusion, and generational needs 

SHRM emphasizes that Total Rewards should not be managed in isolation. Instead, it should be integrated with HR strategy, organizational culture, and leadership principles. 

An effective Total Rewards framework becomes an essential part of talent management. It helps HR professionals attract candidates who align with the company culture, encourages internal mobility, and creates a consistent employee experience across different teams, regions, and departments. It also supports compliance, especially in global organizations navigating varied labor laws and benefit requirements. 

What is a Total Rewards Program? 

A Total Rewards Program is the formal structure through which these rewards are offered, managed, and communicated. It is not a random collection of perks; instead, it is an intentional framework designed to shape a company’s employee value proposition. 

Key elements of a successful Total Rewards Program include: 

  • Clarity: Employees understand what is offered and how to access it. 
  • Alignment: Every component supports broader HR and business strategies. 
  • Measurement: Regular data and feedback guide adjustments. 

Common components include compensation bands, bonus plans, well-being programs, internal mobility policies, learning platforms, and recognition tools. But the key is cohesion. The program should feel like a unified system, not a list of disconnected offerings. 

For example, a company that values innovation might offer rewards for idea submissions, fund learning stipends, and recognize employees who take smart risks. A company that focuses on customer service might tie rewards to NPS scores and support development through empathy training. The Total Rewards Program becomes a tangible expression of the company’s mission and values. 

What is an Annual Total Rewards Package? 

An Annual Total Rewards Package refers to the year-over-year summary of all the value an employee receives from their employer. It goes beyond base salary to reflect the full employment offering. 

This can include: 

  • Base pay 
  • Annual bonus or commission 
  • Paid time off 
  • Insurance premiums are covered by the employer 
  • Employer contributions to retirement plans 
  • Equity awards 
  • Tuition reimbursement or learning credits 
  • Recognition points or awards 
  • Use of company-provided tools, devices, or wellness programs 

According to Buffkin Baker, communicating this annually reinforces value perception. Many employees underestimate what they truly receive from their employer. A transparent, personalized summary strengthens trust and engagement. 

Some companies present this data in Total Rewards Statements, which visually summarize the full package in a simple one-page document or digital dashboard. These statements help employees make more informed decisions about staying, growing, or even referring others to the company. 

Why a Total Rewards Strategy Matters Now More Than Ever 

The modern workforce is hybrid, multigenerational, and increasingly values-driven. Compensation alone is no longer enough to attract and retain talent. 

According to Indeed and Pelago Health

  • Gen Z and Millennials prioritize well-being and flexibility. 
  • Career development and purpose rank as top motivators. 
  • Recognition and feedback directly affect performance. 

Organizations that implement Total Rewards strategies see: 

  • Reduced voluntary turnover 
  • Higher levels of engagement and productivity 
  • Enhanced employer brand and candidate conversion 

As workplace expectations continue to evolve post-pandemic, employers are expected to provide more than just “jobs.” They need to provide meaning, community, and growth. A strong Total Rewards strategy does exactly that, positioning organizations as employers of choice in their industries. 

How to Build a Total Rewards Program: Key Steps for HR Teams 

  1. Audit Current Offerings 
    Map what is currently being offered. Identify gaps in coverage, relevance, or fairness. Consider the employee lifecycle from onboarding to offboarding. Include feedback mechanisms and participation data. 
  1. Gather Employee Feedback 
    Use surveys or focus groups to understand what employees value. Segment by role, career stage, and location. Consider generational differences and regional expectations. This ensures relevance and avoids waste. 
  1. Define Goals and Design with Purpose 
    Align the program with your talent strategy. Are you trying to improve retention? Close pay gaps? Elevate DEI? Ensure every reward element connects to these goals. Set metrics for success. 
  1. Communicate Effectively 
    Make it easy for employees to understand their rewards. Use visuals, digital tools, and Total Rewards statements. Keep it clear and personal. Reinforce messages in onboarding, performance reviews, and internal events. 
  1. Measure and Iterate 
    Use data to evaluate effectiveness. Monitor usage, satisfaction, and business impact. Iterate regularly based on trends and workforce needs. Leverage benchmarking data to stay competitive. 
  1. Integrate Across HR Functions 
    Total Rewards should link to performance management, learning and development, DEI, and talent acquisition. A cohesive strategy increases impact and reduces overlap. 

Build a Total Rewards strategy that attracts, motivates, and retains your best people, start shaping your employee experience today.

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Final Thoughts

Total Rewards is not just an HR initiative. It is a cultural mindset. It says: “We see you as a whole person, not just a job title.” 

HR teams that embrace Total Rewards build organizations where employees feel valued, supported, and empowered to thrive. In a world of rising expectations and rapid change, Total Rewards is not optional – it is essential. 

Organizations that invest in Total Rewards are investing in long-term performance, resilience, and trust. They are not only preparing for the future of work, they are actively shaping it.