In the world of employee benefits and HR, the concept of total rewards is nothing new. For as long as employers have been supplementing cash compensation with additional offerings, savvy employers have differentiated themselves beyond cash with total rewards to attract and retain talent.
Oh, sure, total rewards offerings have evolved over the years, with employers offering increasingly sophisticated, structured and diverse benefits programs, and that evolution has only accelerated as a result of the COVID-19 pandemic. Work-from-home (WFH) arrangements, recalibrated personal priorities and heightened appreciation for holistic wellbeing — including mental health – have helped create an extraordinarily active employment market that’s generally favorable to employees, and that, in turn, has led employers to enhance their benefits programs with more valuable total rewards.
What Are Total Rewards?
Simply put, anything an employer offers to attract and retain client. They include salaries, bonuses and incentives, equity compensation, health benefits (medical, dental, vision), retirement benefits, paid time off benefits, investments in professional development (tuition assistance, training, certifications), wellness programs and recognition programs (spot and service awards). Beyond salary, benefits such as health insurance, retirement plans, financial support for training and education, paid time off and leaves, wellness programs and more can add 30 percent or more to the value of an employees’ compensation package. But a total rewards package is only truly valuable if a current or prospective employee:
- Has a clear understanding of the benefits and other rewards the employer offers;
- Recognizes the value — in both monetary and quality-of-life terms — of each benefit;
- Understands how to use their benefits included in their total rewards package.
Consider health insurance. While most of us would agree that Americans pay too much for health expenses, many do not realize that their employers are picking up the bulk of the tab for the premiums, which can add up to over $10,000 a year. Employer contributions to 401(k), 401(b) and other retirement plans are another major component of total rewards, often totaling $5,000 or more a year.
PTO and Professional Development
Paid time off (PTO) is another big component of total rewards, and one that has value with many candidates and employees well above the face value because it’s a big part of achieving that elusive work-life balance. Employer practices vary widely, but the more savvy understand that offering generous paid time off benefits on the front end is a great tactic for recruiting experienced candidates who place a lot of value on work-life balance.
Paid time off can go beyond the traditional sick, holiday, vacation and mandated unpaid leaves such as FMLA to include paid leaves for medical, family and career development. Something for employers to think about with paid leaves beyond their face value: Studies (and common sense!) indicate that employees have better mental health and are more productive when taking regular time off and, as a result, are more likely to stay with their employers.
Professional development is yet one more example of a total reward component that has value far beyond cash. Employees have career goals, and an employer who helps to achieve those goals will have an edge in recruiting and retaining career-minded professionals by offering education assistance, training and support for certifications and continuing education.
Summing up an employer’s investments in total rewards beyond cash can easily exceed $20,000. For a C-suite executive, that may be a modest percentage of their salary, but for someone making $50k-$100k, non-cash rewards can be between 20% and 40% of their overall compensation. Add to that the hard-to-quantify but definitely real value we all place on the peace of mind and work-life balance that a great total rewards package can help us achieve, and the appeal is even greater.
Presenting the Total Rewards Statement
Having a comprehensive and valuable total rewards package is a great first step. Showing the value to candidates and employees is the critical and often overlooked next step.
From March 24 through June 18, 2021, Alera Group conducted a survey of more than 2,500 companies across the United States to gain further insight to trends in employee benefits and plans. Included in the survey was a question about employers’ total-rewards strategy. Here are the response options and results, as published in the Alera Group 2021 Benchmarking Survey Report:
- Our employee benefit package plays a role in employee performance, recruitment and retention. Therefore, we look to align our benefits with our competitors. (48%)
- Our employee benefit package serves as a critical tool in employee performance, recruitment and retention. Therefore, we strive to be an industry leader. (40%)
- Employee turnover is going to happen regardless of benefit offerings. Therefore, our approach to benefits is more financially-driven versus strategic. (11%)
Clearly, an overwhelming majority of employers recognize the value of a great total rewards program. Where companies can differentiate themselves in their efforts to attract and retain a talented workforce is in demonstrating that value through employee engagement and employee experience (EX).
It was with this priority in mind that Alera Group designed its Total Rewards Statements — clear, concise and attractive presentations that use leading edge technology to provide users with print and online options for viewing their compensation packages. Alera Group’s Total Rewards specialists make things easy for employers, as well, working with organizations to compile benefits information in a straightforward, intuitive template, which can be customized with your company logo and narrative.
Total Rewards Statement formats enable you to engage current and prospective employees at two levels:
- Spreadsheet value — detailed in charts and a line-by-line itemization of each benefit, its provider, terms of coverage, employee contribution (where applicable) and company contribution;
- Intangible value — conveyed through explanations of less-quantifiable benefits, such as matching contributions for charitable donations, company-sponsored volunteer activities during work hours and, perhaps most important, the availability of such popular offerings as flex time and work-from-home (WFH) arrangements.
Given the fierce competition in the current labor market, employers are best advised to enter the fray with shields up and phasers armed. With their appeal to both current employees and job candidates, Alera Group’s Total Rewards Statements serve both of those functions.
Enhancing Your Total Rewards
With wellbeing-related benefits becoming increasingly important to employees, employers are wise to feature them in their total rewards programs. Alera Group will address this topic on August 19 in a one-hour webinar, “Holistic Wellbeing: Shifting Total Wellbeing Strategies.” We’ll discuss how to adjust your organization’s total wellbeing strategies to integrate top trends and support an evolving workforce, and we’ll provide you with practical tips for implementing these strategies and achieving your recruiting and employee-retention objectives.
To register, click on the link below.
About the Authors
Aimee Bruyer, SHRM-CP®
Partner, HR Services
Wilson Albers, an Alera Group Company
Throughout her career, Aimee Bruyer has focused on building great HR and benefits processes, and helping employers and employees solve problems. Before joining the Alera Group’s ConnectHR team, she worked for two large employers where she led development of administrative processes that brought a positive user experience, efficiency and data integrity to a complex array of benefits, providers and systems across multiple subsidiaries. Aimee is particularly drawn to the user experience, which shows in her approach to process improvement, administration, training and customer support for Alera Group clients.
- (907) 205-3430
- Connect with Aimee on LinkedIn
Thomas Showalter, CCP®, SHRM-SCP®
Director, HR Services
Wilson Albers, an Alera Group Company
As a trusted adviser, Thomas Showalter seeks to help businesses perform at their best by helping people perform at theirs. Thomas founded Alera ConnectHR to provide businesses the HR strategy, guidance, and support they want. Alera ConnectHR’s teams help business leaders envision the work culture, talent and engagement that will foster long-term success, then roll up our sleeves to make it happen. As the head of Alera ConnectHR Thomas’s role is simple: provide his team with the guidance, support, and resources to deliver on that commitment.