Balancing Pay and Benefits: How to Structure Total Rewards

Creating an appealing compensation package involves finding the right balance between pay and benefits. Inflation and the cost of living are major concerns for everyone, therefore base salaries must meet these needs. Benefits are usually offered in compensation packages, too. Nowadays, more people are emphasizing the importance of having valuable benefits. This is where total rewards in human resource management come into play.

So, how do you ensure that the total rewards HR you offer your employees tick all the boxes? You’ll need to understand the market value of a position and consider a person’s qualifications and skills when deciding their pay. Then, agree on what holidays, health insurance, caregiving, stock ownership, pension plans, and other benefits you can offer. These may need to be tailored to individual employees. Let’s dig deeper into the concept of total rewards in human resource management.

Understanding Total Rewards in Human Resource Management and Their Importance

Total rewards packages are the combination of pay and benefits you offer your employees. It’s about having a comprehensive package that attracts and retains top talent while offering set and varied rewards depending on the individual. This is essential for success in today’s competitive job market.

Total rewards HR are what makes your company a great place to work and help you stand out from your competition. Dedicated and loyal staff want a competitive salary, but they also need a supportive work culture, schedule flexibility, and employee benefits that are useful to them. Find the right balance and put time and effort into understanding both the quantitative and qualitative rewards that employees want.

Consider your own job search – what would persuade you to take one role over another? Each of your employees has something they value equally, or even more than, a competitive salary. Addressing a compensation package holistically, in the form of total rewards HR, reflects better on your organization as being considerate and supportive.

Balancing Pay and Benefits in Total Rewards HR

Assess the current job market and ensure you’re paying competitively and offering attractive benefits compared to competitors.
Choose a mix of compensation options (i.e. base salary, bonuses/incentives, stock options) that reflect your company culture and values while still meeting employees’ expectations.
Create an environment where employee recognition is valued - whether through financial bonuses, perks, or other forms of recognition for accomplishments or milestones reached.
Provide opportunities for improvement - such as tuition reimbursement programs or additional training opportunities - so employees can grow with your company over time.

What Benefits Should You Offer Employees in Total Rewards HR

The Society for Human Resource Management (SHRM) conducted a survey to rate the importance of certain benefits to employees. 62% said that health care benefits were of high importance. Paid leave was voted on by 63% of participants. As you can tell, there are certain benefits that are recognized as essential across the board.

Here are some other benefits worth offering to your employees in the context of total rewards in human resource management:

Flexibility – remote and hybrid work structures provide more opportunities for a work-life balance
Care assistance – childcare or aged care assistance will take time and pressure off an employee who is responsible for juggling work and caregiving
Retirement benefits – this could come directly from an employee’s paycheck, or be set up as a 401(k) plan
Autonomy – giving your employees more freedom when deciding when, where, and how they complete their tasks will build trust
Transportation reimbursement – easing the cost of public transport and/or fuel will leave employees with more disposable income
Education reimbursement – paying for further education will not only entice employees who wish to grow their careers but can also bring new skills into your organization
Career development – opportunities to take on new responsibilities and expand on skills is an especially enticing benefit for entry-level workers eager to work and learn
Mental health leave – as burnout and stress continue to plague the workforce, it’s important to demonstrate that you value your employee’s health by offering leave for mental breaks
Fitness – offer gym memberships, fitness groups, or healthy eating plans to encourage the overall well-being of your employees

Designing Benefit Packages for Employees in Total Rewards HR

Customize to Individuals
Of course, desired benefits will vary depending on the individual. You’ll need a benchmark of benefits offered to all, like healthcare benefits and paid leave. It’s then important to have conversations with individual candidates or existing team members to understand what benefits they really desire.

The International Foundation of Employee Benefit Plans (IFEBP) conducted a survey that revealed that 31% of the participants didn’t perceive value in their benefits. Don’t waste money or resources offering benefits that go unused! You could even provide flexible compensation plans that allow employees to opt for different combinations of benefits that best suit them.

Focus on Wellbeing

Have the wellness of your employees in mind when creating your benefits packages. When offering benefits that emphasize the value of a healthy lifestyle, you show your team members that you care about them. Healthy workers will also have the physical and mental strength to produce better results and increase their productivity at work. What’s more, nurturing well-being could even reduce long-term healthcare costs.

Educate & Encourage

The final tip is to ensure your employees actually know what their benefits are and how to access them. The same survey conducted by IFEBP also found that 80% of participants didn’t read the materials provided about their benefits and almost half didn’t understand them. Discuss the benefits on offer in hiring interviews and conduct training sessions to teach current employees how to access them. Remind your team that their salary isn’t the only reward they’re receiving for their work. Leverage your compensation package to boost your company branding.

In Conclusion

The key to attracting top talent and improving retention rates is much more than just pay. Even though salaries are the most visible and focused aspect of compensation packages, benefits play a major role, too. Creating a total rewards package means understanding the financial needs of an employee, but also values their wellbeing, career growth, and work-life balance.

Effective total rewards packages have the power to increase employee satisfaction and drive performance in your workplace. Taking the time and effort to develop a holistic package that demonstrates the financial commitment your organization is willing to make for the personal and professional growth of its employees. This is the essence of total rewards in human resource management.