In an ever-evolving labor market, talent attraction and retention are critical organizational functions. Pressures in the external environment and shifting employee preferences have put a focal point on a Total Rewards (TR) strategy to attract and retain talent. To support the implementation of a TR strategy and improved organizational talent attraction and retention outcomes, McLean & Company, one of the world’s leading HR research and advisory firms, has published its data-backed industry blueprint titled Build a Total Rewards Strategy.
A Total Rewards strategy captures a holistic view of what an employee receives in return for working at an organization. While it encompasses the traditional categories of compensation, such as base pay, and benefits, such as healthcare, it also includes the following:
- Wellbeing – Supporting employees’ overall happiness both within and outside of work.
- Development – Supporting employees’ development of knowledge, skills, and attributes.
- Recognition – The acknowledgement by the organization and employees of the demonstration of desirable behaviors.
“A Total Rewards approach focused solely on compensation and benefits no longer captures the full extent of what employees value, nor is it flexible enough to adapt to the current labor market, “says Will Howard, director, HR research & advisory services at McLean & Company. “Regardless of how extensive an organization’s Total Rewards offerings are, they will have little to no impact if they are designed without the unique aspects of your employee population in mind and are not perceived as meaningful.“
While many organizations have a combination of compensation, benefits, wellbeing, recognition, and/or development offerings, few have a holistic TR strategy in place. Despite compensation, benefits, and other TR areas making up a significant portion of an organization’s overall expenditures, McLean & Company’s resource outlines how there is often a lack of understanding of which TR offerings employees value and how they impact organizational success. Therefore, the firm suggests organizations take steps to understand what employees value most and work within budgetary and resourcing constraints to provide meaningful rewards.
To build a Total Rewards strategy and find the right balance of priorities between organizational and employee needs, McLean & Company recommends that HR leaders follow four key steps that will yield a three- to five-year roadmap upon completion. The four steps are:
1. Plan and define goals – The first step requires establishing a TR project team, reviewing strategic documents and uncovering key takeaways, and scanning the external competitive environment. Once those are complete, HR leaders can move on to creating an inventory of current TR offerings and reviewing and analyzing existing organizational data and additional data from employees on TR offerings.
2. Determine cost optimization initiatives – Step two includes leveraging key takeaways from step one to define current and ideal states for each TR category, identifying gaps between the current and ideal states, and brainstorming strategic projects to address identified gaps. Upon completion, HR leaders should consult with Finance and HR stakeholders to determine budgetary and resourcing constraints and prioritize strategic projects based on estimated effort and potential impact.
3. Prepare an action plan – Step three involves gathering information to assess prioritized strategic projects, examining each strategic project against organizational resource constraints, and prioritizing strategic projects into a finalized list.
4. Build a TR strategy roadmap – The fourth and final step calls for defining goals and metrics for each strategic project on the finalized list and developing a business case to secure senior leadership buy-in. With a completed business case and clearly defined goals, HR leaders can draft an overarching TR purpose statement, an action plan, and the necessary associated communications as well as plan an evaluation and iteration process for the TR strategy.
For full insights and guidance on creating a Total Rewards strategy that supports both employee and organizational needs, HR professionals can download McLean & Company’s industry blueprint, Build a Total Rewards Strategy.
For more about McLean & Company or to download the latest industry research, visit hr.mcleanco.com and connect via LinkedIn and Twitter.