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What is a Total Reward Strategy?

A reward strategy sets out the organisation’s reward plan and, therefore, guides the development of reward policies, processes, and practices. It communicates what the organisation values and, therefore, what it is prepared to structure within its total rewards strategy. In short, it communicates what employees can expect in return for what their time, skills, and expertise.

Creating a structure around rewards is important in an organisation’s overall financial and operational planning.

Why is a Total Reward Strategy Important for Organisations?

The people who work in a business are the organisation’s most important asset. If you invest in machinery, then you take care of it and have a structured maintenance protocol to work with. Rewards schemes for employees are just that - they give you a structured approach to making sure they are working happily and productively. In particular, they allow you to:

  • Attract and retain the people you need to succeed.
  • Align employees with the business strategy, culture, and values.
  • Motivate employees and drive performance.

What Components Are Typically Included in a Total Reward Strategy?

A reward strategy typically covers the following:

  • Base Pay. This is the basic rate of pay that your employees can expect and should be benchmarked against similar roles within your industry sector.
  • Variable Pay. This incorporates any additional commissions, overtime and other reward strategies that may be incorporated into a role.
  • Benefits and Non-Financial Rewards. This covers everything over and above pay. It could include flexible working, employee perk schemes, gym membership, private healthcare, food and snacks, award schemes…

How Does a Total Reward Strategy Contribute to Employee Engagement and Motivation?

We all know that a salary is a fair exchange for the contribution an employee makes to the business. A reward and recognition strategy goes beyond this basic exchange, recognising that the contribution is more than simply a monetary exchange but also takes into account an individual’s loyalty, ambition, and motivation to contribute over and above what is expected.

The more that these values are recognised and rewarded, the better your recruitment and retention rates, which in turn benefit the company both operationally and financially.

How Can Organisations Align Their Total Reward Strategy With Their Business Objectives?

For reward strategies to be successful, it needs to be aligned with the organisation’s strategy, culture, and values. In addition, it must also meet the needs of employees and reflect the context within which the organisation operates. To achieve this, as part of developing a reward strategy, thorough research must be conducted into areas such as a business strategy to ensure alignment.

What Role Does a Total Reward Strategy Play in Attracting and Retaining Top Talent?

An effective reward strategy should provide rewards that meet the needs and preferences of the talent the organisation wants to attract and retain. To achieve this, as part of developing a reward strategy, thorough research must be conducted on what existing and potential talent values in terms of the working environment, what will improve their work-life balance, and what will motivate them.

How Do Organisations Communicate Their Total Reward Strategy to Employees?

Communication is a critical part of the implementation of a reward strategy and comes in many forms, such as workshops, briefings, newsletters, education, etc. You can’t do enough communication! Once implemented, many organisations choose to communicate the value of their reward package annually through Total Reward Statements.

Don’t forget as well that the communication needs to work both ways. As well as you telling your employees what to expect, even more important is that you listen to what they would like. By implementing a reward strategy for employees that has been driven by the employees themselves boosts morale and an overall sense of agency and ownership, which in themselves helps to improve overall productivity.

What Are the Key Considerations When Designing a Total Reward Strategy?

When working on reward schemes for employees, we break our approach down into the following:

• We start with thorough research. E.g., business/HR strategies, culture, values, competitor/market information, etc.
• We then analyse the research findings to gain insights.
• We translate those insights into the design of the reward strategy.
• We then work with the organisation to implement and communicate the reward strategy.
• Finally, we measure the success of the reward strategy. In other words, does it do what it is intended to do? If not, why not?

How Can Organisations Ensure That Their Total Reward Strategy is Competitive in the Market?

Yes, from our perspective, as long as we hold sufficient data, it can be used to benchmark salaries. We work extensively (though limited to) with housing associations, utilities, professional associations, healthcare, engineering, and communications. You can read about some of our UK salary benchmarking successes on our case studies page.

Can a Total Reward Strategy Be Customised for Different Employee Groups or Levels?

In both the job evaluation and job matching processes, the results are reviewed with the client and report production is an iterative process. Most importantly, Paydata is completely transparent in its salary benchmarking methodology and provides details in the final reports.

Get In Touch

Visit our case studies page for reward strategy examples, and contact Paydata for further information on how Paydata can help to structure a competitive total rewards strategy for your organisation.

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