Building a total rewards strategy that attracts top talent

When it comes to building a strong team of employees, employee satisfaction and happiness is everything. Happy, motivated employees are more likely to be productive, innovative in their roles, and importantly for employers, stay with a company for a long period of time. Plus, overall employee happiness can have a knock-on effect on company culture – it’s that secret sauce that makes your business a great (or not so great) place to work.

It’s a little alarming then, that according to Michael C. Bush, CEO of Great Place to Work, only about 40% of the 3 billion people who work worldwide are happy at their jobs. That’s a lot of unsatisfied, restless employees in the workplace.

Lots of elements go into job satisfaction, but one that employers can definitively have influence over is the rewards and compensation they offer their employees. That’s where a total rewards strategy comes in – used by successful companies the world over, having a comprehensive suite of rewards and benefits can make a significant difference to employee satisfaction.

We're here to take you through exactly what’s involved in building a total rewards strategy and implementing it in your business.

What is a total rewards program or strategy?

A total rewards program or strategy is an approach that businesses use to motivate and retain employees, as well as attract new talent to their team. It’s not as simple as the figure in the payslip, but instead encompasses a range of benefits programs and incentives that are designed to inspire your team.

In short, it’s what you can offer your team to make their hard work worth the while.

What are the five components of total rewards?

Total rewards strategies are generally broken down into five key components:

1. Compensation

Compensation is what you offer your employees financially for their skills and efforts. It includes a base salary, any additional bonus pay and commission. You may also offer stock options in the company or cash bonuses for holidays, like at the end of a year.

2. Benefits

Benefits are additional offerings by employers on top of compensation. This could include health insurance, retirement contributions, additional leave days on top of statutory requirements, or work equipment.

3. Wellbeing

Wellbeing specifically covers those additional benefits that employers offer their team members to support their physical, mental and emotional wellbeing. This could include gym memberships, access to a free counselling service, healthy eating workshops or flexible working for a better work life balance.

4. Recognition

Recognition is all about how an employer celebrates a job well done. This doesn’t have to involve a financial reward – it can be as simple as verbal praise or company-wide recognition. The important thing is that the recognition is encouraged in the company, and sometimes in a structured way (like specific company awards annually).

5. Development

Development encompasses opportunities for your employees to build their skills and knowledge. That could include bringing in a learning management system, funding training courses or facilitating in-house workshops.

I lead a small business – how can I build a complete total rewards package?

If you run a smaller business, we know that a lot of this corporate jargon can seem inaccessible. Time and budget is often a lot tighter compared to large companies, so building out comprehensive awards strategies can appear to be a pipe dream.

In fact, according to Employment Hero’s State of Recruitment Report, 89% of SME HR leaders said they’d struggled to hire due to the inability to offer the same perks as larger organisations.

Here’s our advice – work with your limitations and get creative. Sure, you might not be able to drop a ton of cash on fancy free gym memberships, but you might be able to leverage technology and local connections to build cost-effective rewards for your team. We’ll take you through how you can build a total rewards strategy, regardless of your budget.

How to build and implement an effective total rewards strategy

Step 1: Assess your current offerings

Start by taking a step back and examining what you currently offer your employees. This will give you a good idea of which components you’re including from a typical total rewards strategy e.g. compensation and benefits, and which components you’re missing.

Don’t forget the basics either – a total rewards strategy always starts with that base salary that you give your employees. Make sure that you’re paying a salary that is competitive in your market, to retain and engage employees effectively. Using a salary benchmarking tool is very useful for this – give ours a try today for free.

Consider how you’ll keep that salary up to date with regular salary reviews as well. We've got a guide on salary reviews to get you started.

Step 2: Get feedback from your team

Your employees are the ones who will be on the receiving end of the total rewards strategy, so it's crucial that you have a good understanding of what they want from it.

It can be as simple as sending around a company-wide survey to gather employee feedback, asking what kind of rewards they would actually use and if there are any existing benefits they don’t think are required. The results will likely give you a good base of knowledge for the next steps.

Step 3: Consider your company focus

Depending on your company values and focus, you might find that your total rewards strategy has more emphasis on one or two of the five components. That’s totally fine – what makes sense for your company might be different from a business in a different industry.

For example, a gym with team members who are very active in their roles might offer more wellbeing benefits than other companies, to ensure employees are physically cared for and find it easier to stay fit for their role.

In contrast, a business that relies heavily on innovation might have more professional development opportunities than other companies, so that their team has the chance to stay up to date and adequately skilled for their work.

Take some time to consider what focus would suit your company, and adjust your planning accordingly.

Step 4: Brainstorm ideas and plan how they’ll work

Next, get a whiteboard, a big piece of paper, an online shared space – whatever you need to generate and note down ideas. Use that information you’ve gathered from employees and bring in different perspectives to come up with rewards that suit your company.

Remember that these rewards don't have to be costly. For example, you might work with a local coffee shop to provide Friday morning brunch at a reduced cost, in exchange for some promotion of their services online. The gym that’s just opened round the corner might be happy to negotiate a great deal if it brings people and referrals through the door.

Flexible working is also a popular perk, and it doesn’t have to cost anything, provided you’ve set out a clear policy and have adequate cover if required.

Development opportunities don’t have to break the bank either. There’s plenty of good value e-learning platforms out there that you can offer to your team. Building a culture of effective reward and recognition may require a little work too, but having and implementing an effective plan for how you'll recognise top performance might be all that’s required.

Step 5: Implement the strategy and communicate it well

Once you’ve got the rewards nailed down, that’s your total rewards strategy ready to be put in place. Introduce the plan to your team and be clear about what it means for them, whether it’s including criteria for performance recognition or detailing how their benefits will be distributed by year.

If you’re introducing a suite of new rewards, it can be helpful to have a shared space for information that employees can access, such as an accessible HR policy or an intranet page. There’s very little point in introducing rewards if employees aren’t aware of them or use them, so give them the best opportunity to benefit.

Step 6: Track performance

Set a specific period of time to assess whether you've implemented an effective total rewards program. At the end of that time, check how often the rewards were used, how employees feel about them and if there is any space for improvement. Like all business strategies, total rewards strategies are rarely ‘one-and-done’, but should be assessed and adjusted over time for real success.

Communication is key – keep a metaphorical ‘open door policy’ when it comes to feedback, and listen to any concerns or issues that may arise. There may be something you’ve missed along the way.

How can businesses measure key metrics of a total rewards package?

There are a few ways that you can comprehensively measure the performance success of your total rewards package. The first is to track the usage of the benefits – for example, how often a subsidised service was used, or how many recognition awards were given out. This should give you a good idea of whether the team has fully embraced the rewards, and if you need to make them more accessible.

The second is to collect metrics from your employees. It can be as simple as gathering ratings on your previous rewards package, and then another round of ratings after implementing your new total rewards strategy. This will give you a good idea of whether you’ve made the right decisions. You may want to narrow down each element of your total rewards package when collecting ratings, to ensure that you’re adequately covering what your employees are looking for.

A total rewards package is just the start – we’ve got the information you need to become an employer of choice.

Introducing a total rewards strategy can make a significant difference to employee satisfaction and happiness. If you’re driven to retain and motivate your employees, as well as attract new team members, then bringing in tangible rewards is a great way to do it.

Don’t forget to start your strategy by assessing your base offering either – our salary benchmarking tool can also offer a comprehensive understanding of salary trends, pay ranges, and candidate expectations. It’ll help you stay competitive in the wider market.

Finally, if you’re looking for help with recruiting new team members, SmartMatch can cut down on cost per hire, while managing the onboarding journey. It’s the future of hiring, and it’s available now. Try Smartmatch today.