Total Rewards is sum total of Compensation, Benefits, Work Life, Performance & Recognition and Development and Career Growth.
It looks beyond the monetary compensations and helps to strategically evaluate the non-compensatory rewards.
A Total Rewards System helps to build the employee value proposition.
It helps to attract, engage and retain talent. It reinforces an organization brand image and differentiates itself from other companies.
A Total Rewards System has to be developed in alignment with Company Strategy and also Human Resource Strategy.
It is also dependent on organizational culture, workforce demography and external factors like competitor, industry regulations, and labour laws.
A Total Rewards System has to also consider Job Equity.
Job Equity. Organizational Job equity refers to the perception that all employees in an organization are being treated fairly. Companies need to benchmark their payabilty standards with respect to the market and develop salary ranges accordingly.
Inequity or a perceived inequity or unfairness can result in low employee morale. This can cause employee turnover and thereby affect organizational effectiveness.
“Internal equity exists when employees in an organization perceive that they are being rewarded fairly according to the relative value of their jobs within an organization”
It is the comparison of jobs within the organization to ascertain fair pay between them. The same can be understood using Job Analysis and Job Evaluation.
“External equity exists when employees in an organization perceive that they are being rewarded fairly in relation to those who perform similar jobs in other organizations”.
It is the comparison of jobs with similar jobs outside the organization to ascertain market rate for the same jobs. The same can be understood using Competitor Mapping, Salary Survey and Industry Standards.