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By: Amy Dozier on November 9th, 2020

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How Employee Total Rewards Is Changing in 2021 and What You Need to Do

Total Rewards

We’ve talked before about how it’s sometimes hard to communicate Total Rewards to employees, especially younger workers. Employees don’t always see beyond their paycheck, and employers struggle to show the value of less tangible benefits.

After the events of 2020, all of that is about to change.

Employers and employees need each other now more than ever. Businesses will depend on smart, agile workers who can help navigate through choppy waters. People will need respectful, reliable bosses who will support both their career and their well-being.

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A great employee Total Rewards package is essential for building this kind of mutually beneficial relationship. But to get the package right, you have to understand how the world has changed since last year.

How Total Rewards is Changing in 2021

The WorldAtWork Total Rewards model includes five elements that comprise employee total compensation. Let’s take a look at what each of these will mean in 2021


Salary is always going to be the most important reward for both parties. Some employees might be even more dependent on their salary than ever before, especially if their partner lost their job during the pandemic. For employers, salary is one of the biggest controllable operating costs. In challenging market conditions, you might be under pressure to implement pay freezes, or even make cuts. Where the budget permits, some employers are considering performance bonuses and incentive pay. 


Health insurance takes on new importance in the current climate, especially when employees’ partners might have lost their health cover. There’s also a greater demand for paid time off right now, as well as flexible working patterns that allow employees to manage other commitments. Work-from-home options were popular part of the benefits package before the pandemic, and will be even more popular throughout 2021.


Most employers did an impressive job of rising to the challenge of Covid-19. Companies quickly shifted to a remote work environment while implementing on-site safety measures. The challenge in 2021 is to keep this effort going. The upheaval of the past year has created a great deal of stress and anxiety. Employers can counter this by investing in Employee Assistance Programs, offering mindfulness and relaxation tools as part of the total rewards package.


Any restructuring will involve moving employees around and redistributing responsibility. To make a success of this, employers need to step up their training and development programs. While there’s a lot going on right now, it’s also important to keep an eye on the future by investing in career development programs and succession planning. From an employee’s perspective, development opportunities are more important than ever. Now is not the time for anyone's career to stagnate.


People performed extraordinary feats in recent months. In the face of unprecedented levels of disruption, they’ve continued to hit targets and satisfy customers. Employers have to equally step up their performance recognition efforts and show their appreciation for hard work. Remote worker recognition programs may require some creativity – you can’t organize a team lunch when everyone is working remotely.

How to update your Total Rewards strategy in 2021

Every crisis is an opportunity. For employers, this is a chance to reboot their approach to implementing a Total Rewards strategy. You can take this opportunity to drive engagement, enthusiasm, and excellence.

Here are a few tips for a new Total Rewards strategy:

1) Listen to employees

Employee feedback can tell you a lot about your current Total Rewards strategy. Use pulse surveys and other tools to get an idea of their needs and concerns. Compare this data to previous results to see how things have changed since the pandemic.

It’s also important to talk to employees about their concerns outside of work. People have problems such as a partner losing their job, a family member being ill, or juggling additional responsibilities, like childcare. If you understand these concerns, you’ll have a better idea of what employees need in terms of rewards.

2) Avoid one-size-fits-all approaches

During 2020, many companies engaged in timely conversations about diversity and inclusion. We learned a lot about how there are disparities within every organization, and how some of these iniquities relate to factors such as race, gender, and sexual identity.

A report by WorldatWork identifies several ways that Total Rewards can help. An honest pay-equity assessment can identify areas where you need to review compensation, while inclusive and purpose-driven benefits can address the needs of individual employees. Companies can also review their career enablement strategy to help create a more diverse generation of new leaders.

3) Add pandemic-related benefits

The pandemic is perhaps the most disruptive event in living memory. In 2020, 68% of employers responded to this by offering new employee benefits, including:

  • Support for mental wellbeing
  • Hazard pay
  • Financial support for remote working
  • Medical benefits and expanded sick leave programs
  • Childcare support
  • Flexible working patterns

These benefits are all about responding to the changing needs of employees. That’s why it’s important to understand what each person needs and think about how you can help them succeed.

You’ll also need to consider some other aspects of your Total Rewards program in light of new working practices. Training and development might have to move online, with mentoring sessions over Zoom. You’ll also need to find innovative ways to recognize people when teams are working remotely.

4) Be honest about bad news

Economic uncertainty looks set to continue throughout 2021, and that might force you to make some tough decisions. It’s always hard to give bad news. If handled incorrectly, it can impact engagement and retention.

That’s why communication is so important. If you keep everyone in the loop, it’ll help to dampen any gossip or speculation. Set realistic expectations as early as possible, and explain the logic behind all of your decisions. Be ready to listen and respond to employee feedback. Communication is itself a kind of reward. By being open and honest, you’re recognizing that your people are professionals who play a part in the company’s strategic aims.

5) Look to the future

Total Rewards can help solve some short-term problems, but it’s really a tool for long-term planning. How can you leverage rewards to help deliver your strategic goals? When you’re assessing your total rewards strategy, ask questions like:

  • How do we hang onto our best people?
  • How do we help our people progress to the next level?
  • How do we attract the brightest new talent?
  • Where will the next generation of leaders come from?
  • How do we build a vibrant, collaborative culture?
  • Do we have an engaged, empowered team that will seize every opportunity for growth?

Whether you’re optimistic about 2021 or you’re concerned about the challenges ahead, it’s important to keep an eye on the future. And the key to future success is happy, engaged employees who feel properly rewarded.

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