Total Rewards is a crucial part of the employee experience but most people think of it primarily as compensation and benefits. While those are certainly a part of Total Rewards, they are by no means all of it. Total Rewards includes a few things:
1. Compensation: Salary and potential sign on bonuses
2. Benefits: Health insurance, retirement plans, and wellness programs.
3. Work-Life Balance: Flexible working hours, remote work, and paid time off.
4. Career Development: Training, career growth, and mentoring.
5. Recognition & Rewards: Bonuses, awards, and recognition.
6. Culture and Environment: Organizational culture and employee engagement.
Most employees around the world actually rank Total Rewards (and specifically compensation) as the #1 reason for why they take a job and it’s not hard to see why. Total Rewards is the foundation of what allows you company to attract and retain top talent, motivate and engage your employees, and even create alignment.
A study by Aon found that companies with a well-rounded Total Rewards strategy that includes career development, work-life balance, and recognition experience 21% lower turnover rates compared to companies that focus solely on monetary rewards. Another study by Deloitte found that companies that offer a mix of financial and non-financial rewards experience 20% higher productivity on average than those that rely primarily on monetary compensation. Effective Total Rewards can have a massive impact on your company, but what are the top-performing companies out there actually doing?
I teamed up with Insperity to answer this question and here is what the research shows.
While high-achieving organizations offer similar Total Rewards components as their counterparts, they distinguish themselves through strategic implementation and alignment with broader talent goals. Here are the key insights:
Culture and talent strategy drive success: Top-performing companies cultivate a people-first culture that creates an atmosphere where Total Rewards can truly flourish and support overall talent objectives.
A powerful EVP charts your talent course: Top-performing companies craft and consistently communicate their unique employee value proposition (EVP), with Total Rewards playing a starring role.
Reward components target key outcomes: Top-performing companies generally agree on the business impact of Total Reward components, but high achievers excel in execution.
Consistent communication amplifies impact: Top-performing companies excel at conveying the value of their Total Rewards package throughout the employee journey.
What impact does doing these four things have? When looking at the top-performing companies, they were significantly more likely to identify as an employer of choice (44% vs. 15%) and reported greater success in acquiring new customers (59% vs. 13%). 59% of top performers reported better-than-average success in acquiring new customers, compared to only 13% of standard performers.
It’s tempting to assume that the top-performing companies are simply the ones who offer more “stuff.” One of the most intriguing parts of the study was that when comparing top-performing companies to standard-performing companies, the components of their Total Rewards programs are almost identical across the board. This includes health benefits, base compensation, and even non-cash and stock awards. This means that it’s not about the quantity of your Total Rewards program that employees care about. The difference is in the implementation and the communication of the Total Rewards programs as opposed to their scope and availability.
Total Rewards is a critical component of attracting and retaining top talent, but to get the most out of your investment, it should be grounded in a thoughtful talent strategy and communicated effectively.
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Do you know the most important factor in your company’s success? It’s your people. They’re the heart of your business. So, how do you harness this potential?
Insperity can help. From recruiting and onboarding to employee development and retention, they’ll help you build a stronger, more resilient organization. See the difference the right approach to human resources can make – because how you HR matters. Find out more at Insperity.com/hrmatters.
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