An Effective Vehicle to Communicate Total Reward

Total Rewards include various components that the employer should carefully combine and use to ensure optimal attraction, motivation and retention of high calibre and required skills. The employer further uses carefully designed total reward elements that will shape employees’ behaviours in such a way that it will drive the desired business performance and ultimately achieve the business goals, ensuring shareholder satisfaction. The secret to successful total reward implementation lies firstly, in the employer’s understanding of the employees’ perceptions of the valuable reward components, secondly in the optimal mix of these desired elements and lastly (and possibly the most important) in the effective communication of the total reward offering to employees in a way that will promote the employees’ understanding and appreciation of the value derived at a personal level.

According to the WorldatWork Society there are five elements of total rewards, (1) remuneration, (2) benefits, (3) work-life, (4) performance & recognition and (5) development & career opportunity. The optimal mix of these elements collectively describes the companies reward strategy to attract, motivate and retain key talent.

The employer should carefully select and combine components of total reward in a holistic manner which will align to both what the company and the employees value. An effective combination of the components will drive the desired behaviours, attract and retain staff, increase employee satisfaction and engagement and assist in company goal achievement.

Employee Value Proposition

Do employees know the value they are getting from the employment relationship and do they regard this value to simply relate to the net take-home pay on the payslip or the value they receive from the company medical aid participation? Undoubtedly, most employees do not realise the total value they receive from their employer and it is only until they move to the next employer that they become aware of the benefits they enjoyed and are now lost. This can mainly be attributed to the lack of proper employer communication of the total employee value proposition. The loss of valuable skills may have been prevented where the employee value proposition was strategically communicated through an effective total rewards statement.

Move from Theory to “Total Reward Statement” (TRS)

The theory of total reward will however remain theory unless the employer moves the theory to reality. The value of a total reward approach does not only lie in the integration of the different programs but very importantly in the effective communication thereof to employees, through which the employee value proposition is promoted. A total rewards statement can be effectively used as a pragmatic vehicle to move from theory to practice through the use of an effective and carefully designed communication tool that will successfully reach employees to promote the employee value proposition. It is imperative that employees are made aware of the full value of their total rewards to increase the company’s return on investment in their employees.

Organisations may differ in terms of the approach followed around the design and content of a TRS, however, generally the TRS includes both the tangible and non-tangible company provided remuneration and benefits elements, amongst the other total reward elements. It is often found that companies may even use the TRS at a strategic level to tell the company unique total reward story that reflect the company values, culture and brand. This is not surprising as companies think very strategically (and often philosophically) about the unique mix of the total reward elements and programs offered to employees, thus aligning to the company strategy. Therefore why not use a TRS to communicate a powerful company specific and unique message to employees?

“Total Reward Statement” Considerations

It is important that the TRS remains very unique to each employer – reflecting the company values, building the desired brand and achieving what it intends. However, apart from the strategic there are many considerations when designing a TRS:

Personal and Individual Reward Statement

A TRS should reflect a personal message to each employee that is unique, only to that employee. Here it is important to address the employee in person by using a known name typically supported by a personal message from the Chief Executive Officer. In addition, only the reward elements that are specifically applicable to the employee should be reflected on the TRS. In other words, where for instance a long term incentive scheme does not apply to certain employees, there will be no benefit of providing information pertaining to this remuneration element where the employee does not participates. The TRS should therefore provide employees with a personalised document that communicates the overall individual employee value proposition.

Typical elements included in the Total Reward Statement

Once again, organisations may differ vastly in their approach around the specific contents they would like to include in the TRS, making this a unique and powerful vehicle that is exclusive to the organisation. It is important to realise however, that the TRS communicates much more than what is reflected on a payslip. Dependent on the strategic intent, the content may vary from the inclusion (or exclusion) of:

  • The guaranteed cash remuneration elements (also referred to as fixed remuneration), which may include the basic cash component and other guaranteed cash allowances;
  • The guaranteed non-cash benefits such as retirement fund -, medical aid -, funeral fund -, disability -, groups personal accident -, group life assurance – and vehicle insurance benefits;
  • Additional details and specific benefits of the non-cash benefits (listed above) where the employee participates;
  • Variable remuneration such as short-term -, long-term – and commission schemes;
  • The TRS is further used to emphasize the communication of the non-tangible benefits that are unique to the organisation. These are the “often forgotten benefits” of working for a particular company and the employer should consider the power these may have on the attraction, retention and engagement of key talent by the strategic inclusion into the TRS. It is often the non-tangible elements that may be valued highly by the company’s workforce. These include the last three elements of the WorldatWork model namely, (1) work-life, (4) performance & recognition and (3) development & career opportunity; and
  • The TRS further provides important information such as contact numbers to assist employees with queries, such as the Human Resources, Payroll, retirement – and medical aid fund contact details.

Simple Design and Communication

There are many different ways to communicate a TRS to employees and the methodology applied will depend greatly on the company’s preference and internal policy around the use of technology. Furthermore the frequency of communicating a TRS may vary from once a year (perhaps during the salary review period) to more regular intervals. The product delivery may be a company branded hard copy (or paper-based) or dependent on the availability of technology at an employee level, as an online solution.

Ultimately, the TRS should communicate a powerful message that is unique to the employer, easy to understand, accurate and deliver the employee value proposition at a personal level.

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