Employees are regularly reminded of their salary via paystubs, but what is most beneficial to maximize your investment in your people and ensure high employee engagement is communicating their total rewards, comprised not only of compensation and benefits but also the employee experience.

This article breaks down the definition of total rewards and discusses competing views of total rewards.

Defining Total Rewards

Everyone has a slightly different definition of total rewards. However, in general, there are three components:

1. Compensation
2. Employee Benefits
3. Employee Experience – Anything outside of compensation and benefits that would be seen as a reward for working for your organization. Examples include:

• quality of employee-supervisor relationships
• quality of peer relationships
• opportunities for growth and development
• a sense of purpose in one’s work
• amenities and perks within the physical environment of the workplace

Competing Views of Total Rewards

While compensation and benefits are quantifiable, the employee experience is more qualitative and subjective.

CFO MODEL

When CFOs think about total rewards, they want a tangible ROI. This is the basis for the CFO model.

EMPLOYEE MODEL

Huge financial and other impacts can be tied to the employee experience piece of total rewards. These intangibles can create employee loyalty and encourage effort, creativity and innovation, while a lack thereof can lead to decreased engagement, productivity and morale — and even negatively impact your bottom line.

We all know what benefits and compensation entail, so let’s dive into the other two components:

• Relationships & Experiences – People don’t leave bad jobs; they leave bad supervisors. In fact, supervisors are responsible for up to 70% of the variance in an employee’s overall wellbeing – inside and outside of the workplace. Therefore, strong leadership development and manager training programs must be in place. Other important pieces of this component are team building and social opportunities, minimal politics and gossip, and fun and enjoyable events. Lastly are perks in the physical workplace, such as onsite fitness classes, access to healthy food and good aesthetics such as natural light, art and ergonomically sound workstations.
• Purpose & Growth
  • Purpose – Employees want to feel that they’re contributing to something greater than themselves and find meaning and purpose in their work. This is why having an inspiring vision or core values that are consistently communicated and woven into the culture of the organization is critically important.
  • Growth – Having opportunities for growth and development, both personally and professionally, is something employees desire. Organizations should consider strong development programs, mentorship opportunities, establishing a clear career path and effective performance review processes, among others.