As the workplace evolves, so do employee expectations. Here’s what you need to know.
Compensation and total rewards are no longer just about paychecks and benefits–they've become essential drivers of employee satisfaction, retention, and organizational success.
Employers need to rethink how they structure and deliver rewards and compensation to meet the needs of the modern and rapidly changing workforce.
This article covers everything you need to know about future compensation and total rewards, including:
The link between pay and performance
Why personalized rewards are becoming increasingly important
How to attract and retain top talent
What are total rewards?
Total rewards include everything from basic pay to benefits, and even career opportunities and upskilling.
Other examples of total rewards include:
Pensions
Learning and development opportunities
Health and vision plans
Dental plans
Paid time off
Remote and flex working options
Why do they matter?
Total rewards matter because they go beyond basic salaries. Yes, how much somebody earns is the key driving factor, but when other compensation is baked into the workplace offerings, it can improve work-life balance and employee satisfaction.
Today’s workforce expects more than a paycheck—they want to feel valued and supported at work. A well-designed total rewards program can improve employee satisfaction and also attract top talent.
When done correctly, there are lots of benefits to reach out and grab.
The link between pay and performance
Performance-based pay is when companies reward employees for achieving set goals to help keep employees accountable and motivated.
Examples of performance-based pay include:
Bonuses
Equity and stock incentives
Sales commissions
These bonuses are on top of a regular salary to help encourage employees to go the extra mile.
What are the benefits?
For starters, pay-based performance encourages high performance and goal alignment.
When employees are rewarded for their work—and not just given more work—they become more driven. This helps boost employee engagement and productivity. They’re no longer doing work to get more work—they’re doing it for rewards.
What about potential challenges?
Pay-based performance benefits do not come without a couple of challenges, though.
For example, managing expectations and associating performance metrics with pay can be stressful. In some instances, this can cause more harm than good, potentially causing burnout and encouraging employees to overwork themselves.
Second, balancing fairness when setting goals is tricky unless you give the same goals to all employees.
Also, not all employees are money-driven. They see their job as nothing more than a job, and while a good salary is important for them, increased work and performance-based compensation may not be a good fit.
What about personalized rewards?
Rewards are becoming more personalized and are no longer one-size-fits-all.
Every employee wants something different, whether that’s paid time off to spend with their kids, a bonus to help save for a house, or extra financial support to achieve peace of mind and achieve personal goals.
Examples of personalized rewards include:
Flexible benefits packages tailored to individual needs
Wellness incentives such as mental health workshops and fitness classes
Learning and career development opportunities
Personalized rewards show employees that you care.
Think of it like this… If you gave every employee a $100 gift card to Starbucks, some would love it. Other employees, not so much. What if they don’t drink coffee?
Instead, maybe you give a gift card to the employee you see who has the latest Starbucks coffee combo and, say, a gift card to a running outlet for the co-worker who only talks about running.
A little personalization goes a long way.
How to use total rewards at work to attract and retain talent
Compensation and rewards play an essential role in helping to retain and attract top talent.
The workplace has never been more competitive. And with more organizations offering competitive compensation packages and employee wellness programs, you need to stay up to date and with the latest trends to compete.
So, what works?
Offering unique benefits tailored to employee needs, e.g., student loan repayment assistance or extended paid parental leave
Highlighting rewards in job advertisements (and sticking to them)
Creating a culture where employees feel their contributions are recognized and appreciated
Key Takeaways
Total rewards help improve employee satisfaction and attract top talent
Consider offering performance incentives to encourage and motivate employees
Personalize rewards to show employees that you care
FAQs
What are the components of a total rewards strategy?
Total rewards include initial salary, bonuses, benefits, professional development and upskilling, and work-life balance initiatives.
How can companies balance personalization and equity in rewards?
By leveraging data to understand employee needs and ensuring that personalized options are offered equitably across the workforce.
Why is linking pay to performance becoming more popular?
Performance-based pay aligns employee efforts with business goals to increase motivation and accountability at work.
Looking for more? Contact a Wellbeing Manager to discuss your organizational wellbeing needs.
We provide workplace teams with mindful practices, personal and professional wellbeing growth, fitness instruction, and opportunities for social connection. We aim to inspire the highest potential in people at work, in life, every day, so they can show up healthy and at their best.