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BEYOND THE PAYCHECK: WHY TOTAL REWARDS MATTER

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Recognizing and rewarding employee efforts is key to effective human resource management. A reward system should be aligned with the overarching organizational goals, fostering a competitive edge and facilitating the achievement of objectives. Thus, to truly reward and retain top talent, organizations should consider a total rewards strategy.

What is Total Rewards?
A comprehensive hybrid rewards system that integrates both financial and non-financial elements. It encompasses the full spectrum of valued facets of work – from competitive pay, flexible working opportunities, a positive work environment,or being treated fairly. Hence, this holistic approach can be a key component of a strategic reward plan, with employers leveraging it to strike a balance between intrinsic and extrinsic motivators aimed at effectively engaging employees.

The Power of Five
According to WorldatWork, a US-based HR Association, total rewards encompass 5 elements, each of which comes with various policies, tools, and practices. Together, these elements articulate an organization’s strategy for attracting, motivating, and retaining employees.

  1. Compensation: Fixed and variable income which has been tied to different levels of payment. Examples include salary, cash bonuses, and stock options
  2. Benefits: Supplements the cash pay and are designed to enhance the physical, emotional, and familial safety of employees. Examples include leave plans, health insurance, and retirement plans
  3. Work-Life: This includes practices, policies, and programs designed to help strike a healthy balance between work and life while promoting well-being. Examples include DIEB (Diversity, Inclusion, Equity, and Belonging) programs, flexible work schedules, or remote working options.
  4. Performance and Recognition: Performance relates to the alignment of organizational, team, and individual efforts for the dual success of organization and employee performance. Examples include providing continuous feedback. Recognition relates to acknowledging employee actions, efforts, behavior, or performance through various cash and non-cash means. Examples include presenting employees with awards or expressing gratitude verbally.
  5. Development and Career Opportunities: Development refers to the learning experiences crafted to augment employees’ skills and competencies, thereby enriching their professional portfolios. Examples include training, education, or mentoring programs. Career Opportunities relate to plans for employees to advance their career goals, such as through vertical or horizontal promotions.

A carefully crafted total rewards strategy extends beyond mere talent acquisition; it represents an investment in the organization’s most invaluable asset: its people. By creating a workplace that encourages engagement and success, total rewards undoubtedly play a crucial role. It further helps to unlock the full potential of the workforce and achieve a competitive edge in today’s job market.

Author: Aishath Thashkeel
Aishath Thashkeel is an educator with a keen interest and love for the field of Human Resource Management.

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