There is a new term being bandied about in payroll and HR departments: total rewards. The term describes a way of presenting employees with a big picture understanding of everything they are given in exchange for the work provided – both tangible and intangible.
The question is, why are companies paying so much attention to total rewards? Because today's younger workers expect it. They are beginning to assess everything they get out of their jobs as compared to what they put in. If total rewards are not commensurate with the amount of work and effort expended, workers are likely to look elsewhere for work.
Difference Between the Two
The total compensation concept has dominated the American workplace since the post-World War II era. Total compensation includes salary/wages and tangible benefits like health insurance, a retirement plan, paid holidays, and paid vacations. Total compensation is a great starting point. But it is not the same thing as total rewards. This is where modern companies need to understand the difference so as to affect a change.
An increasingly tighter labor market dictates that employers can no longer ignore the concept of rewards. In fact, they need to take a serious look at total rewards programs if they are to compete for the best talent in their industries.
So what does a total rewards program look like? In short, total rewards includes everything an employee gets out of his or her job. In addition to salary/wages and health insurance benefits, a total rewards program also includes things like:
• work/life benefits (wellness programs, continuing education opportunities, etc.)
• performance recognition
• performance and career management
• flexible work hours.
Low Adoption Rates, for Now
Given the importance of total rewards to younger workers, it would stand to reason that companies would be pursuing total rewards programs with abandon. That is not the case. At least not yet. According to a 2017 reported from Deloitte, just 20% of America's employers are offering fully-integrated total rewards programs.
Among the remaining 80% not offering total rewards programs, 75% are interested in full or partial integration of pay and benefits with other, non-tangible rewards. Companies across multiple sectors are at least showing interest in the total rewards concept even if they do not quite know how to implement it yet.
One possible explanation for the low adoption rate is the fact that management tends to be older. As with any other paradigm shift, older managers don't view compensation packages in the same way as their younger employees. It will take time to complete the transition from total compensation to total rewards as the standard operating procedure for the majority of employers.
Thinking Outside the Box
Total rewards is a concept with broad appeal. What makes it so appealing is that the rewards a given employer offers don't necessarily have to be what everyone else is offering. The rewards that go above and beyond weekly pay and fringe benefits can be as unique as an employer's workforce.
Taking advantage of the total rewards concept is all about thinking outside the box. What kinds of things would most appeal to a company's local team? What is important to them in terms of demographics, work/life balance, career needs, etc.? When a company figures that out, they are well on their way to total rewards integration.
Here at BenefitMall, we can be part of your total rewards program through our innovative payroll and benefits administration services. We support companies like yours through a variety of services that free up your business to focus on serving your customers. Contact us to learn more.