Total Rewards Programs Key to Recruiting & Retaining Top Talent

Insight By
Mike Iley
Topic
Employee Benefits
Total rewards programs are a vital part of workplace culture, employee performance, and securing top talent. Learn how program enhancements can help meet the demands of a changing workplace and workforce.

Plan sponsors are often faced with a balancing act of what benefits to offer versus what employees actually value the most. To develop the best program, many look to a total rewards approach, which provides a holistic look at compensation plus the "hidden paycheck" of benefits and wellness and/or education programs to empower employees.

5 Main Components

The main components of a total rewards program generally include the following:  

Compensation

Normally, the base pay received by an employee is often the entry point for the overall employment package. This can be the baseline of how an employee sees their worth and value at the company. Key employees will also be looking for the right combination of short-term and long-term incentives to reward them for thinking like an owner.  

  • Base pay: Competitive base W2 compensation along with regular pay increases
  • Short Term Incentives: Bonus plans to reward employees for hitting KPIs and contributing to company success
  • Long Term Incentives: Deferred compensation and stock plans designed to reward long-term thinking and retain key executives

Benefits

Benefits are essential for recruiting and retention efforts. Nearly 7 out of 10 employees say their benefits package is why they stay at their job.1 Your benefits package should reflect the specific needs of your workforce and may include some of these options:  

  • Insurance Benefits: Medical, dental, vision, telehealth, mental health, life, and disability
  • Financial Benefits: Retirement plan, financial wellness, student loan repayment, emergency savings fund
  • Paid Time Off: Sick leave, flex/vacation time, parental leave

Work-life Balance

The effect of the COVID-19 pandemic on employers and employees was deeply felt, and yet, it highlighted the need for work-life benefits to become flexible and evolve. Several work-life features were ranked as extremely or very important by employees, including flexible work schedules (83%), leave of absence options (83%), and family-friendly work environments (76%).2 The pandemic caused many employers to revisit and revise their employee benefits last year and expand them to support employees who needed more remote work options, flexibility to care for family members, and more ways to protect their physical and mental health. Employer ingenuity to address these needs further shows a commitment to their employees' overall well-being.3

Learning and Development

While educational training sessions can take employees away from their primary work, the intellectual capital gained from the practice is plentiful. Not only can these sessions contribute to employee morale and knowledge, but they also help to enhance efficiencies in one's job, which can result in improvements to the company's bottom line.  

Performance and Recognition

Appreciation of employees' actions can be monetary but also go beyond their paychecks. Recognition can increase employee self-worth and productivity, while it also highlights their value within a team as well as the company.  

Total Rewards in 4 Steps  

There are four primary steps to develop and maintain a total rewards program according to SHRM, the human resources non-profit:4

  1. Assessment of the current benefits and compensation system to determine program effectiveness can involve surveying employees to gain opinions on pay, benefits, and opportunities for growth and development, as well as examining current policies and practices. A summary of recommendations and solutions should be the desired outcome.
  1. The design of the total rewards program should involve senior management identifying and analyzing various reward strategies while determining what would work best in their workplace.
  1. HR departments implement and execute a rewards system. Employee communication and training is also necessary to measure relevant variables.
  1. Total rewards program effectiveness must be regularly evaluated with the results communicated to company decision-makers. Based on these reviews, modifications can be proposed and implemented.  

Build It, and They Will Come  

Total rewards programs are critical for the workplace culture, employee performance, and overall recruiting of top talent. As the workforce changes or becomes even more competitive, it's essential to evaluate, adjust and enhance your employee benefits package to remain competitive and continue to recruit and engage top talent.  

This is where we can help. We are dedicated to helping our clients develop benefit plans that fit the business owner's needs, focus on company goals, and help employees feel confident in their financial future.  

1Ameritas. “What Benefits Do Employees Value Most?” April 2021.

2Miller, Stephen. “SHRM Benefits Survey Finds Renewed Focus on Employee Well-Being.” SHRM.org. Sept. 2021.

3Miller, Stephen. “SHRM Benefits Survey Finds Renewed Focus on Employee Well-Being.” SHRM.org. Sept. 2021.

4SHRM.org. “What are total rewards strategies? Can you give me some idea on how to develop a total rewards strategy?” 2022.

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

Insight By
Mike Iley
Managing Director
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Topic
Employee Benefits
Published on

May 20, 2022

updated on

May 20, 2022

Disclosure

This article is for educational purposes only. The tax and legal references attached herein are designed to provide accurate and authoritative information with regard to the subject matter covered and are provided with the understanding that LoVasco Consulting Group is not engaged in rendering tax or legal services. If tax or legal advice is required, you should consult your accountant or attorney. LoVasco Consulting Group does not replace those advisors.

Securities and Investment Advisory Services offered through M Holdings Securities, Inc., a registered broker dealer and Investment Advisor, member FINRA / SIPC. LoVasco Consulting Group is independently owned and operated.

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