How to Attract & Retain With Your Employee Total Rewards Program
With the worst of the pandemic behind us, many businesses are moving out of survival mode and into a new phase of growth. These companies are making plans to expand their current teams with new hires – and many of them are hitting a brick wall.
Around 40% of leaders say that they’re having trouble finding qualified candidates right now. The demand is pushing up salaries across the board, with 41% of managers saying they are losing employees to rival firms that offer higher pay.
If you’re already struggling to manage your salary expenditure, this can be a cause for serious concern. How can you keep your team together if rival employers are offering massive raises?
But here’s the good news: compensation isn’t just about salary. In this guide, we’ll talk you through the Total Rewards approach to compensation and show you how to create a rewards program for employees that attracts candidates. We’ll also help you design an offer to help you engage and retain your existing team.
Table of Contents
- What is Total Rewards in HR?
- What are the five pillars of Total Rewards for employees?
- Can a Total Rewards program really attract and retain employees?
- Total Rewards: Compensation
- Total Rewards: Benefits
- Total Rewards: Work-life balance
- Total Rewards: Recognition
- Total Rewards: Professional Development
- Building your Total Rewards offer
What is Total Rewards in HR?
Employees earn more than just a salary. Each job offers additional forms of compensation, which we can roughly divide into two categories:
- Tangible: Compensation with an objective cash value, such as salary, perks, benefits, paid leave, and funding for education.
- Intangible: Anything that benefits the employee, such as flexible working, well-being support, recognition, and professional development. While you can’t always put a dollar value on these benefits, they offer meaningful value to the employee.
The Total Rewards approach assesses all of these tangible and intangible forms of compensation and communicates them to employees.
By doing so, you’ll help your team understand the total value that they derive from their job. With this information, people can accurately compare your compensation package with other employers’ offers.
What are the five pillars of Total Rewards for employees?
Total Rewards defines five categories of rewards. Some are tangible, some are intangible, and others might be a mix of both.
Here’s an overview of the five categories.
Salary is the main component of a compensation structure, but it’s not the only one. You might also offer commissions, signing bonuses, profiting sharing, 401(k) contributions, or equity.
Most employees will expect health insurance for themselves and their families. Others will seek out benefits like dental cover, gym membership, or company vehicles. Remote working and flexible hours are sometimes listed as benefits, but many employees see them as must-have requirements these days.
3. Work-life flexibility
Recent events have transformed the way people think about their work-life balance. Remote work has allowed employees to see an alternative to the 9-to-5 grind. In this alternative model, people deeply value opportunities to spend time with family, work on their education, and care for their well-being.
When people exceed expectations, they deserve to be recognized. Ideally, this will happen within a formal recognition structure, such as performance bonuses tied to key metrics. Employees also value less tangible forms of recognition, such as written commendations from leaders.
5. Professional development
Training and education can help people level up their careers, which will help increase their total lifetime earnings. Employees know this, which is why they seek out companies that will invest in professional development and provide opportunities to earn valuable experience.
Can a Total Rewards program really attract and retain employees?
If you’re a pragmatist, you might wonder how much Total Rewards approach can influence a candidate. Will someone really turn down a substantial salary hike just because you offer them remote working and professional development?
And it’s true – when a candidate has multiple offers, salary is often the deciding factor.
But it’s not the only factor, especially after the pandemic. Recent events have impacted the way people think about their lives and their work. Let’s take a look at how some of those big changed have manifested.
5 ways COVID-19 changed the labor market
The pandemic affected people in unpredictable ways, such as:
Change #1: The switch to remote working
During the pandemic, many teams made a sudden shift to working from home. Although intended as a temporary solution, this ended up being extremely popular with employees. Remote working means saving hours on the daily commute, plus it makes it easier to manage your work-life balance.
Change #2: A greater appreciation of the work-life balance
The pandemic changed the way many people think, not just about their job but about work in general. People were separated from loved ones for months during lockdown. Some people, sadly, lost family members to the virus. For some, the COVID-19 crisis made them question whether their job was affecting their well-being and their personal relationships.
Change #3: New ways of working required new benefits
The pandemic demonstrated the importance of having core benefits like paid time off and generous medical cover. It also fundamentally changed some needs. For example, membership and discounts for local businesses are only helpful if you’re in that locale. Remote workers need benefits that they can access in their hometown or online.
Change #4: Gen Z’s careers suffered
One in four workers say that the pandemic causes a career setback, with Gen Z suffering more than others. People who are at the beginning of their careers need coaching, mentoring, hands-on work experience, and networking opportunities. These candidates are desperate for employers that will help them get their professional plans back on track.
Change #5: The Great Resignation
Perhaps the least predictable event of recent years was The Great Resignation. Almost without warning, thousands of workers across the country simply quit their jobs. Many of them didn’t even have new opportunities lined up. Why did so many people quit? Mostly because of the reasons above: desire for remote work, better benefits and work-life balance, or to seek out new opportunities.
Want to create a Total Rewards program for your employees? Focus on value.
All of these changes are changes in perceived value.
For example, pre-pandemic employees didn’t perceive commuting as an unfair imposition. But now that people are aware of the remote alternatives, they see that commuting uses their personal resources. Gas money comes from their salary; commuting time impacts their work-life balance.
Other examples include:
- Flexible working schedules: A flexible schedule offers a better work-life balance. This can have tangible benefits, such as savings on childcare costs.
- Well-being options: Work environments that promote well-being will help improve overall health. For employees, this means lower medical bills and fewer opportunities missed due to illness.
- Training and mentoring: Professional development is an investment in the future. Time spent on training and mentoring today will lead to higher salary payments tomorrow.
The trick is to look at your Total Rewards from the employee’s perspective. Are your rewards offering meaningful value to the individual?
A reward is only a reward if it offers value to the employee.
With this in mind, let’s look closer at how to provide value in each of the five categories of Total Rewards.
Total Rewards: Compensation
Satisfaction with salary is one of the most accurate predictors of employee retention. If people are unsatisfied with pay, they’re unlikely to stick around for the long term. That’s why 40% of leaders say that their main priority for the coming year is a full compensation review.
That’s a concern when 43% of employees report that they feel underpaid. It means that nearly half of all workers are retention risks. If another company offers a higher salary, you might end up losing your best people.
3 steps to make your salaries competitive
Salaries are a balancing act. You have to keep your salary structure competitive, but you also have to think about fiscal responsibility and business resilience. The best way to balance all of these things is to get organized:
1. Benchmark against rival employers
Salary benchmarking involves looking at comparable salaries on offer elsewhere. You’ll need a reputable source of salary survey data to get started. After that, you’ll need to match the data according to job function, locale, and company size.
Salary survey data is available from many third party providers (including Helios HR’s partner Paylocity PayScale, whose data you can access for free here.) Use this data to check your salaries against market average and see if you are an employer of choice.
2. Stick to a disciplined salary structure
When you’re trying to sign a talented candidate, it’s tempting to offer them a massive starting salary. This approach can certainly help get the contract signed, but it could lead to further issues down the line. For example, what happens when the rest of your team learns that they’re getting less than the new guy?
Define a salary structure that allows you to live within your means while also competing with rival employers. Once you have that structure in place, be sure to stick to it. This discipline will help ensure your business resilience in the long run.
3. Review all existing salaries
The pandemic disrupted everything, including employee compensation. Around 54% of employees say that their salary growth was impacted by COVID-19, with women, minorities and Gen Z affected the most.
Now is a good time to review all salaries and chart out each employee’s salary growth. If anyone has been left behind, think about ways that you can bring them closer to the team average.
Remember, salary isn’t everything
Everyone wants to have the standard of living that comes from having a good job. But salary isn’t the only factor that decides whether people accept an offer or stay in their current role.
A Harvard Business Review study found that 90% of people would choose a lower salary if it meant doing more meaningful work. Other factors, such as culture and personal relationships, can often be just as important as rewards.
So, if you can’t compete on salary alone, don’t give up. There are other ways to wow candidates and secure your current team.
Total Rewards: Benefits
The pandemic also changed the way we look at benefits. Over the past two years, most people saw how an excellent benefits package could make a real difference to them. Employees remained loyal to companies that offered outstanding health cover, supportive EAPs (Employee Assistance Programs), or generous paid leave.
And the most important benefit of all? Remote work. Before the pandemic, 47% of employees had no access to telecommuting. Now, 44% work from home full-time. Many employees have said that remote working is so important that they would rather quit than return to the office.
3 ways to provide meaningful benefits
As with all elements of Total Rewards, the most important thing is to understand people’s needs and tailor your benefits offering to suit them. Here are a few recent developments to bear in mind when thinking about rewards:
1. People take their well-being more seriously than ever
Is your job a matter of life or death? It’s a question everyone asked during the pandemic when trying to establish who counted as an Essential Worker. It’s also a question that many employees are now still asking themselves. Work can have a massive impact on your health, from job-related stress, to sitting at a desk all day, to the pressure to come in when you’re feeling ill.
Employees are now thinking more about their well-being. They want benefits that will support a healthy lifestyle. That means better health coverage, as well as gym membership and exercise options. They also want structural benefits, such as remote working and flexible work hours. EAPs that offer mental health support are also a big attraction.
2. Remote and hybrid teams need different kinds of benefits
New patterns of working lead to new employee requirements. For example, an on-premises gym is an excellent perk for on-premises staff. But it’s not so great for those who live a hundred miles away. Remote employees might prefer other options, such as membership of a fitness app like Pelaeton.
Rather than try to build a one-size-fits-all benefits offering, it’s best to create different offerings for different audiences. Remember, you may need to cater for:
- Fully on-site employees
- Fully remote employees
- Hybrid workers who split their weekly schedule between home and office
3. Paid time off is always attractive
Before the pandemic, Helios HR conducted a survey of Paid Time Off (PTO) practices. The survey found that 50% of employers offer paid sick leave, while 28% offer personal days. The pandemic forced many companies to rethink their PTO policies, as unusual circumstances created unusual absence patterns.
Additional PTO is a vital benefit as it offers something that money can’t buy: time. But it’s worth bearing in mind that you also need to promote an organizational culture that allows people to use their PTO allowance. Many employees finish the year with a PTO balance because there’s too much pressure to stay in the office and not take vacations.
As a result of the pandemic, we revised our own internal PTO policy at Helios HR. Now, employees can take as much time off as they need, when they need it, with our flexible PTO plan.
Total Rewards: Work-life flexibility
The pandemic has forced us all to become a lot more flexible. Working from home is now commonplace, and this has made it easier for people to adopt a more individualized daily schedule.
The “new normal” was a revolution for many people, who suddenly found it much easier to balance their personal and professional commitments. When leaders tried to insist that everyone return to the office, it sparked The Great Resignation. Almost 4 in 10 professionals said that they would rather quit than give up remote work.
If you’re hiring, this could mean a rare opportunity to secure new talent.
3 ways to be a more flexible employer
First, it’s important to understand that people don’t necessarily want remote work or flexible hours. What they really want is an employer who understands their needs and helps them achieve a sustainable work-life balance. Here are some things you can do to be that employer:
1. Listen to what people need
Everyone wants something different. Parents need flexible hours so they can reduce their expenditure on childcare. People who live far away want to work remotel, allowing them to avoid a lengthy commute. But Gen Z workers might prefer to be in an office where they can network and bond with colleagues.
Talk to your people and find out what they really need. Flexible employers give everyone options so that they can choose the working patterns that meet their unique requirements. The more choice you can offer, the more your team will appreciate you.
2. Build a hybrid team culture
Around 30% of leaders say that their biggest concern with remote work is the effect on organizational culture. It’s true that remote teams will have a transformative impact on culture, but this doesn’t have to be a negative. With some planning and oversight, you can develop a new culture that suits your changing environment.
The biggest challenge is to avoid creating two distinct cultures. Remote and in-office workers are all part of the same team, so they’ll need to communicate in the same way. Work towards building a hybrid culture that brings everyone together, no matter where they work.
3. Avoid bias towards any one group
Bias is a valid concern in a hybrid environment. People in the office are more visible than their remote colleagues, which means that they’re more likely to get picked first for projects. This could disadvantage remote and hybrid workers, who might not get the same opportunities.
Make sure that all leaders understand the importance of keeping remote workers in the loop. Even simple things, like involving them in office conversations, can help make everyone feel like they’re on a level playing field. Get this right, and you’ll prove to employees and candidates that you are a truly flexible employer.
Total Rewards: Recognition
Some individuals are a little more innovative, more focused, or harder working than the rest of the team. High performers such as these can turn a good company into a great one, and help you achieve your strategic goals.
But are these high performers being recognized for their contribution?
A generous recognition program can help ensure that everyone gets what they deserve. And programs of this nature can be a major attractor for smart, ambitious candidates who want a chance to prove themselves. Especially if that recognition has a monetary value, such as a performance bonus.
3 important things to know about recognition programs
Recognition programs are also an important part of your overall people strategy. Let’s take a look at how a great recognition program can be a win-win for you and your team.
1. Recognition is a great way to tackle falling engagement
Recognition is a major engagement driver, with 70% of people saying they recognition from leadership would make them work harder. Seeing as engagement is now back at pre-pandemic levels, it’s essential to do what you can to motivate your team.
Remember, engagement is not just about productivity. It’s also a major factor in employee retention. Engaged employees are far more likely to stick around for the long term, which makes it easier for you to build a winning team.
2. Recognition programs are a major driver of organizational culture
Recognition programs naturally push your team in certain directions. If you offer a bonus for high sales, the team will focus on sales. If you reward people who get great customer reviews, people will focus on service. And this focus ultimately feeds into your overall organizational culture.
Many organizational cultures are in a transitional phase right now. It’s a good idea to think about how you can use rewards to nudge people in a certain direction. For instance, you can help nurture a hybrid team culture by giving praise issuing commendations to people who excel at using communication platforms like Slack and Zoom to bring the team together.
3. Practical rewards go a long way – but so does a thank you
Most employees would prefer to be recognized in the form of cash. Whether that’s a bonus, a raise, or a gift voucher, a cash incentive can show that you are serious about rewarding outstanding performance. Employees also value career boosts, such as promotions, extra training, or the chance to work on exciting projects.
But don’t underestimate the power of saying, “Thank you.” A verbal or written message of thanks can help people feel seen and valued, especially if that message comes from senior leadership. This is the ultimate purpose of a recognition program – to let people know that you appreciate their hard work.
Total Rewards: Professional Development
For people at the beginning of their career, professional development is the greatest reward of all. Many graduate-level employees will consider an offer that will give them the chance to learn and grow – even if that means turning down other offers with better salaries.
Professional development is also key to rectifying some of the DEI setbacks of recent years. Record numbers of women have left the workforce in recent years, creating a growing gender gap at work. One survey found that 93% of HR leaders say that their main priority is developing women leaders.
There are lots of ways to provide professional development to your team, such as:
- In-house training
- Tuition reimbursement
- Allowing people to work on challenging projects
Professional development is good for everyone. Your employee learns new skills that will increase their lifetime earnings, while you get to level up your existing team.
3 important factors in professional development planning
What kind of training do your people actually need? Again, it depends on the individual. Here are three things to bear in mind:
1. Gen Z desperately need to get their careers started
Members of Gen Z have been entering the workforce for the past five years or so. Two of those years were mostly lost to the pandemic, which means that they have a lot of catching up to do. Gen Z job seekers are eager to speak to employers that can offer mentorship and opportunities to expand their professional network.
Gen Z also need practical experience. Graduates typically have a lot of theoretical knowledge, but need to consolidate their education by doing some hands-on work. You will be able to attract this kind of talent if you offer people a chance to roll up their sleeves and get into some meaty projects.
2. Established employees might be worried about digital transformation
People who are further along in their career paths also require training. Digital transformation remains one of this cohort’s main concerns. They worry that technology will move ahead so quickly that they will get left behind.
People also need IT training just to help cope with the new world of remote work. For example, home workers won’t have access to tech support. This means that they will need to learn how to diagnose and repair computer problems on their own. Most importantly – all remote workers will need complete training on cybersecurity measures, with regular refreshers courses.
3. Technology provides cost-effective methods of training delivery
E-Learning is now commonplace in most work environments. Digital trainingLearning Management Systems (LMS) options today make it easy to educate people at their own pace. Plus, you can deliver training to people even when they’re not in the office.
It’s also worth noting that there are a ton of educational materials available online. Sites such as SkillShare, Udemy, and LinkedIn offer professional-level video training materials for every subject imaginable. This is a cost-effective option for businesses on a budget.
Building your Total Rewards strategy
How do you attract, engage and retain great people while also maintaining a healthy budget?
The Total Rewards model is one answer to that question. As we’ve seen above, your employees get much more than just a salary.
If you get things right, your people will also get great benefits, a chance to progress their careers, and a motivating recognition program. Best of all, they’ll have the chance to build a work-life balance that allows them to enjoy all seven days of each week.
Building a great offer isn’t always easy. If you need some help, you can reach out to Helios HR and talk to one of our consultants about your next steps. Book a no-obligation consultation call today and find out how to build a great offer for your people.