Total What?

The term “Total Reward” has been bouncing around the HR world since at least the turn of the century however what began as an attempt to align all facets of the employee value proposition, has often ended up as a vague concept without truly measurable results. Such is the challenge of implementing an effective Total Rewards philosophy that the term is now often mistaken for meaning total compensation and leaves out all the other elements of reward that the approach set out to address in the first place.

Different interpretations exist but broadly speaking, Total Rewards should include all elements that contribute to the employee value proposition whether they be financial or non-financial. This includes the obvious one – compensation, but this is probably the easiest piece of the total rewards puzzle to get right. At the other extreme are perks, flexible hours, branded merchandise, working environment, and many more.

While compensation is important, it is frequently considered a “hygiene” factor with respect to engagement. The challenge for HR professionals is to take high level strategic and cultural goals and translate this in to a Total Reward philosophy that is understood and valued by the workforce – not just left at the front of a PowerPoint presentation in the 5th sub-folder of “Internal items” on the Z: drive.

The good news? Every organization already has a Total Reward philosophy. Every organization will have some form of recognition, some form of development program, some form of performance management process etc. etc. Even if the Total Reward philosophy is not explicitly called “Total Rewards” or written down anywhere, even if it isn’t stored in the 5th sub-folder of “Internal items” on the Z: drive, it exists intrinsically in every organization in the world and probably, at least in some respects, reflects the culture of that organization. The only difference is that it might not have a fancy name.

What this leaves is a huge opportunity for HR professionals to earn a seat at the leadership table and take the implied Total Reward philosophy, assess it, measure it, and identify areas for improvement to deliver increased engagement with minimal investment.

A good start for any company attempting to understand or build a formal Total Reward framework is to conduct a simple gap analysis. It starts by listing all aspects of reward offered to employees – all benefits, perks, flexible working hours, Frisbee golf, subsidized lunch, whatever, and comparing this to a list of all possible forms of reward that could and should be offered based on the company philosophy. World at Work has a fairly comprehensive list that is a good place to start. Then we can easily look at where we are relative to where we want to be.

It is then helpful to understand those aspects that an organization currently offers, and the degree to which these are effectively communicated to employees. With remuneration, this is done fairly easily through a payslip but what about some of the other intangibles? What percentage of employees know about and use the discounted corporate gym membership or the peer-to-peer recognition program in place? Implementing these programs is probably the easiest part of the process but communicating their value to employees takes more than just an e-mail or a link on an HR portal – it takes a leadership structure that understands the whole Total Rewards offering and has the tools and resources to communicate it effectively to the workforce.

Measuring participation in each program is a good measure of how effectively they are communicated but also the degree to which they are of value to the employees. Ranking all elements of Total Reward by participation will give a good sense of what matters most to employees (or at least what employees know about) and helps complete the circle by re-shaping the employee value proposition.

As always, if you are really stuck. Just ask yourself what Arnie would do.

On second thoughts, almost none of life’s lessons can be learned from Arnold Schwarzenegger movies – strike that last remark.

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