What is a total rewards model

A total rewards model is a comprehensive approach to compensating employees, including not just monetary rewards, but also benefits, work-life balance, performance recognition, career development, and a positive work environment. 

This holistic approach aims to create a compelling employee value proposition that attracts new talent while retaining and motivating existing employees.

What are the 5 components of the total rewards model?

A total rewards model has five main components:

1. Compensation

This remains the cornerstone of the total rewards model and includes base salary, bonuses, incentives, and stock options. 

These elements form the foundation of your benefits package and are crucial for attracting and retaining top talent.

2. Benefits

Benefits go beyond simple monetary compensation. They include health insurance, retirement plans, and paid time off. 

These additional forms of remuneration ensure that employees feel secure and supported, contributing to employee satisfaction and loyalty.

3. Work-Life Balance

Flexible working hours, remote work options, and wellness programs are hugely beneficial in today's work environment. 

These options help employees balance their personal and professional lives, leading to higher job satisfaction, loyalty, and productivity.

4. Performance and Recognition

Recognizing and rewarding employee performance is vital, however you choose to do it.

Performance appraisals, rewards, and recognition programs motivate employees to perform at their best and feel valued within the organization. 

5. Development and Career Opportunities

Offering training programs, career advancement opportunities, and mentorship are key to retaining employees. In fact, 94% of employees would remain at a company longer if they felt it invested in their careers.

Development opportunities show that you invest in your employees' growth, fostering long-term commitment and engagement.

How does the total rewards model improve employee retention?

Implementing a total rewards model enhances employee retention by considering the many aspects of work life that contribute to job satisfaction and loyalty. 

When you offer a holistic package that goes beyond monetary compensation, you meet diverse employee needs, reducing turnover rates. 

Development opportunities and work-life balance initiatives, for example, make many employees feel valued and supported, while others prioritize monetary rewards and benefits.

By shaping a well-rounded total rewards package, you can provide something to attract a wide range of talent, with very different values and priorities.

How can you measure the effectiveness of your total rewards model?

To ensure your total rewards model is effective, you can measure its impact through several methods and metrics:

• Employee satisfaction surveys: Assess employee satisfaction with different reward components
• Turnover rates: Monitor changes in employee turnover before and after implementing the model
• Engagement scores: Use tools like Gallup's Q12 to measure employee engagement
• Performance metrics: Evaluate improvements in productivity and performance
• Recruitment success: Track the quality and speed of new hires

Using a combination of several of these methods will give the best analysis of the effect of instituting a total rewards model.

What is the role of the total rewards model in global hiring?

In a global hiring context, the total rewards model helps attract and retain a diverse workforce by offering tailored rewards that meet the specific needs of employees from different cultural and geographical backgrounds. 

Flexible working arrangements and localized healthcare options, for instance, can make positions more appealing to international talent. A well-rounded rewards package can also help overcome challenges related to expatriation and relocation.

How does the total rewards model support remote work?

Many employees may have elderly or disabled dependents to look after. Single parents too may have strong preferences towards flexible working hours. Other employees simply prefer remote working over lengthy commutes to the office. 

A total rewards model can take such considerations into account. Supporting remote work includes:

• Flexible work schedules: Allowing employees to work at times that fit their personal lives
• Remote work stipends: Providing funds for home office setups
• Virtual recognition programs: Ensuring remote workers receive recognition and rewards
• Digital learning and development: Offering online training and career advancement opportunities
• Health and wellness programs: Including mental health support accessible remotely

Hybrid workplaces are increasingly popular, in which an office is staffed one or two days per week, and employees work remotely at other times.

Legal considerations in implementing a total rewards model

Implementing a total rewards model involves navigating various legal considerations:

• Compliance with labor laws: Ensuring compensation and benefits comply with local, state, and federal laws
• Non-discrimination: Designing rewards that do not discriminate based on race, gender, age, or other protected characteristics
• Tax regulations: Understanding the tax implications of different rewards and benefits
• Data privacy: Safeguarding employee information used in managing rewards
• International regulations: Complying with employment laws in different countries when offering rewards globally

It’s important to consult with a legal specialist when drawing up employee contracts that include a range of benefits and rewards to ensure compliance with the latest legislations.

How to align the total rewards model with company culture

Your total rewards model should reflect and reinforce your company's culture and values. 

For example, a company that values innovation might offer rewards such as creative project opportunities or innovation awards. Similarly, a firm that prioritizes work-life balance might offer extensive remote work options and wellness programs.

By aligning rewards with your company's ethos, you create a more cohesive and motivated workforce.

How can you communicate the total rewards model to employees?

Effective communication of your total rewards model ensures employees understand and appreciate the benefits offered. Strategies include:

• Detailed onboarding sessions: Educating new hires about the rewards package
• Regular updates: Keeping employees informed about any changes or additions
• Employee handbooks: Providing comprehensive guides on the rewards available
• Intranet portals: Offering easy access to information on company intranets
• Workshops and Q&A sessions: Hosting sessions to explain the benefits and address employee questions

What is the impact of the total rewards model on employee motivation?

The total rewards model affects employee motivation by addressing many of the intrinsic and extrinsic factors that contribute to satisfaction. 

While competitive pay and benefits satisfy basic financial priorities, recognition programs and career development opportunities address higher-level needs like achievement, personal growth, and job satisfaction. 

This multifaceted approach helps keep employees engaged and motivated. However, studies have shown it contributes less to employee motivation than performance and career management, so it should be paired with other initiatives and tools.

What are the challenges in implementing a total rewards model?

Implementing a total rewards model comes with challenges, including:

• Cost management: Balancing the cost of comprehensive rewards with the company's budget
• Customization: Tailoring rewards to meet the diverse needs of a dispersed or mutli-cultural workforce
• Communication: Ensuring that employees fully understand and appreciate the rewards offered
• Compliance: Navigating complex legal and regulatory requirements
• Evaluation: Continuously assessing the effectiveness and making necessary adjustments

How to enhance the total rewards model using technology

Technology can enhance your total rewards model in several ways:

• HR software: Streamlining the management and distribution of rewards
• Analytics tools: Providing insights into employee preferences and the effectiveness of rewards
• Communication platforms: Facilitating better communication about rewards through intranets and mobile apps
• E-learning systems: Offering accessible career development opportunities
• Recognition platforms: Enabling peer-to-peer recognition and rewards

Deel’s HR resources and platform can help contribute to your total rewards model in a variety of ways. Check out our case studies to see how we can help you motivate your workforce.

Shape the perfect benefits package with Deel

If you're looking to streamline your global payroll and shape a total rewards model, consider booking a demo with Deel Global Payroll. Our comprehensive solutions can help you manage compensation and benefits, no matter where your employees are located. 

Learn more about Deel Global Payroll and see how we can support your total rewards strategy.