Total Rewards Model - Putting It All Together PDF

Revisiting the Total Rewards Model Now that the elements and the approach to total rewards are clear, let's revisit the total rewards model. We'll discuss considerations that must be taken into account in order to determine the right mix of the total rewards elements. The Total Rewards Design Proc...

Revisiting the Total Rewards Model Now that the elements and the approach to total rewards are clear, let's revisit the total rewards model. We'll discuss considerations that must be taken into account in order to determine the right mix of the total rewards elements. The Total Rewards Design Process The challenge of total rewards design is to find the proper mix of elements that satisfy the personal and financial needs of the current and potential workforce, given existing business conditions and cost constraints. The design process begins with the corporate vision and mission, which direct the development of the business strategy. The human resources strategy builds on the business strategy and serves as a guiding light in the design of all HR programs. The total rewards strategy narrows this HR strategy specifically to the five elements of total rewards. The circular process indicates that the process is infinite and repeats itself. A total rewards program should not become too far removed from the corporate mission. It is necessary to return to the mission at the end of the process to ensure that the total rewards strategy continues to maintain alignment with the original mission of the organization. Total Rewards Design Considerations - Labor market - Availability of needed talent - Location/demographics - Competitive wages/rewards - Competition - Industry competitors - Labor - Products/services - Legal/regulatory - Laws - Wage and hour laws - Government mandates - Governing bodies - Employment rights - Taxation issues - Technology - Self-service websites - Administrative software packages - Enterprise software systems - Cost issues affecting the design process - Time -- internal and external time, as well as time to design and review various programs and approve them - Implementation -- Communicating and administering programs involves the use of resources. - Funding -- cost for premiums or contributions to plans as well as establishing and maintaining trust funds - Compliance -- Adding or revising programs may result in costs to comply with legal and regulatory mandates. - Budgeting - Rising health care costs continue to increase the cost of benefits programs. - Demographic shifts in the workforce will affect the cost of benefits programs and the demand for various well-being effectiveness, recognition, and development programs. - Support staff needed to administer the program - A consideration often ignored, forgotten or miscalculated is the number of support staff needed to effectively implement and administer the total rewards program. - Globalization -- As organizations become more global in their outlook and in providing goods and services, they will be looking at innovative ways of rewarding and recognizing employees. One size will not fit all in the global marketplace. Communicating the Value of a Total Rewards Package Employee value proposition -- The EVP defines what employees give to the company and what they get in return. It encompasses every aspect of the employment relationship in a way employees can relate to it. While it may encompass the organization's mission, values, culture and total rewards programs, it is about defining "why people work here" and it extends beyond a list of programs, to truly capture the experience and culture of a particular organization. It is also referred to as the employment exchange or employment deal in that it is a two-way street. The employer provides value to the employee -- in the form of total rewards that are valued by employees. Organizations can communicate their value propositions to attract, motivate, engage and retain employees. Research has shown that when the EVP is communicated effectively and employees understand the value proposition, their organization's financial performance is above that of their peers - Total rewards statement In addition to communicating information targeted to the five elements of the total rewards strategy, some organizations prepare statements summarizing the value of each employee's complete total rewards package. Total rewards statements can help achieve greater employee appreciation and understanding of their total rewards package. However, caution should be taken to avoid arbitrarily setting or estimating a monetary value on intangible benefits that not all employees use or value. - Compensation and benefits data combined - Value of well-being programs itemized - Value of recognition and development programs itemized - General information and specific data - Individualized, personalized - Sent to employees, available real-time electronically, or given to employees by their supervisors and discussed as part of performance reviews