pay: not the only reward

Total reward statements are personalised documents that set out for each employee the full value of the pay, incentives and benefits they receive and an outline of the annual costs. Total reward statements can be used as a way to demonstrate the competitiveness of the overall reward package when compared to the basic pay, and as a way to improve employee engagement as employees feel they are getting a ‘fair deal’.

To give employees a better understanding of their overall remuneration and benefits, a total reward statement breaks down the basic pay, benefits and variable rewards into monetary value to show the employee the cash value of their overall package.

When putting together a package of benefits, companies should also look to include the additional benefits and rewards that are not always considered as extras. Examples may include training, employee counselling services, health insurance, discounts on fitness programs, flexible working, and learning and development.

These can be useful in organisations that:

  • provide a wide range of non-cash benefits
  • offer a fairly generous benefits package
  • have high-quality employee data and well-maintained systems
  • have or are planning to introduce flexible benefits
  • are undergoing major change, e.g. merger or acquisition, and need to deliver targeted rewards information to explain new reward packages.

tailored to individual needs

As the workplace becomes more diverse, the key to an effective total rewards package is flexibility. Employers need to value the individual and look to tailor packages with that individual in mind. Ideally, a package should be negotiated with the employee so that the benefits and rewards agreed upon suit their current personal circumstances 

By offering a choice of rewards and benefits, the employer is better able to target benefits to the individual, as well as enhance the organisation’s brand as a fair and flexible employer. It can also raise awareness of the value of the complete reward package as employees can clearly see the additional benefits on top of their basic pay. 

Tax law, your creativity, and your budget are the only limits to what can be offered.

communicating the true value of benefits

Whatever the benefits package offered, clear communication that is tailored to the individual is critical to its success. Organisations may have a generous, fair and innovative reward system, but if it is not well-communicated it will have little or no impact on recruitment, retention or productivity.

HR professionals identified the main threats to a reward system as:

  • employees do not appreciate value of total reward offering
  • reward failing to engage employees
  • inability to increase pay levels due to budget constraints
  • employees do not understand performance and behaviour requirements
  • incentives do not motivate.

The top ten risks also included “inability to communicate desired performance and behaviours”; ”reward not perceived as fair”; and ”line managers’ poor understanding of reward”, underlining the internal communication challenge.


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