Glossary of Human Resources Management and Employee Benefit Terms
Total rewards is a term that refers to the total financial and non-financial rewards that an employee receives in exchange for their work. It includes base pay, bonuses, stock options, profit sharing, retirement plans, and health care benefits.
Total rewards programs are designed to help employees feel appreciated while motivating them to stay with the company and perform well. They also serve as a way for employers to attract high-quality talent when competing with other companies for workers with specialized skills or talents.
The total rewards approach to HR is a comprehensive, strategic and systematic process that combines all the elements of an organization’s employee value proposition. It takes into account all aspects of employment that have an impact on people’s lives — financial, non-financial, and personal.
Total rewards aim to create an integrated approach to all human capital management activities that align with the organization’s business strategy and generate superior results over time.
Employers, who adopt a total reward strategy, can expect to gain the following benefits:
The importance of total rewards lies in the fact that they can be a deciding factor in whether a candidate chooses to take a job or not. An attractive total rewards package can help attract top talent to your company while keeping existing employees happy and loyal to your organization.
The idea is that if you can offer your employees more than just a paycheck, they will be more engaged in their jobs and stay with your company for longer.
The components of total rewards include:
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A TRS (Total Rewards Statement) should include information about every element of your employee's compensation package: salary, bonuses, benefits and perks, pension plans, and so on. The statement should also include a breakdown of how they compare to those offered by your competitors.
Here's what TRS should include:
Here are some examples of spot awards for employees:
These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).
Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.
eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.
The total reward package is the combination of all the rewards that an organization offers its employees. Total rewards include more than just cash compensation. They also include health care benefits, retirement plans, vacations, personal time off, and other non-cash benefits. The term "total reward" refers to both monetary and non-monetary rewards.
The Total Rewards strategy should be based on the organization's business objectives. It should align with the company's vision and mission statements and complement its strategic business goals.
The total rewards strategy should also be aligned with:
Total Reward Management is the process of developing and implementing a comprehensive compensation and benefits strategy, which includes both pay and non-pay components. It consists of all aspects of employee rewards such as salary, bonuses, benefits, perks, advancement opportunities, and more.
To effectively communicate total rewards, organizations should: