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Andy Phillpott

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Creating and communicating a total reward culture


The statistics say it all – 65% of employees admit to not fully understanding the value of their employee benefits. This is commercial madness when you consider organisations across the UK spend millions in developing and offering employee benefits. However there is a simple solution to this problem. Here Andy Philpott outlines the reasons for total reward and how is can ensure an effective ‘win-win’ for both employer and employee.

The difficult economic climate looks set to be around for the foreseeable future and as a result, pay freezes and bonus removals are yet to be a thing of the past. However, every year employees bank on a pay rise or a bonus as a reward for the hard work and commitment they have shown their employer therefore the prospect of a year without either of these can be a serious blow to morale and, potentially, productivity.

But creating a total reward culture can help soften that blow. Within this culture, it is not simply about the amount of money an employee receives in their pay packet but also about putting a value on the benefits package, training, development and the way an organisation recognises its employees. By doing so, and communicating this value effectively, the reassurance of knowing and appreciating their total ‘worth’ can have a huge impact on an individual’s performance, engagement and motivation.

What exactly is total reward?
There is a difference between total reward ‘statements’ and a total reward ‘culture’. As previously mentioned, the total reward culture focuses on creating a value of the entire package available to an employee, not simply their annual salary and benefits programme. Within this culture it is also important to communicate what being part of the business is all about and the value of this to the employees of the business.

Total reward statements (TRS) are one of the most effective channels through which value can be communicated, however recent research from Accor Services shows only one-third of employers currently offer the statements and just 26% offering them to all employees.

TRS provide instant access to information which details the exact value of their combine salary and benefits for the year. Many incorporate rewards and benefits which have a cost attached to them, as well as those that cannot be quantified for all employees. This may include the impact of flexible working for individuals or the benefits available from an on-site subsidised canteen. The most effective total reward statements also include details of the benefits that employees could apply for, should they wish, as well as details of non-financial benefits, such as training.

What are the barriers to implementing total reward?
Although many employers recognise the potential of total reward, it seems making total reward a reality in their organisation is a problem.

It will be no surprise that the most common reasons for preventing total reward being implemented are time and cost, as well as general resource. In contrast, though, some think it’s too easy to start total reward and fail to acknowledge the effort that is required to make total reward effective and deliver a strong return on investment.

Of those who do introduce total rewards, many find it tempting to stop after the first year. For these employers, it’s often too easy to become ‘distracted’ by the day-to-day functions and demands of the business; for them total reward has been ‘done’ and they are now free to move onto the next item on their ‘to do’ list.

These companies have missed the point. In order to gain a maximum return on investment, total reward need to remain at the top of the agenda. Communication about the value of the total package should not stop and senior management should help drive awareness, along with HR, to facilitate success. After all, it is unlikely efforts to reduce staff turnover or increase employees understanding of benefits have been halted, so why should one of the key factors that make these strategies achievable?

Getting started with total reward

To ensure total reward programmes get off the ground without a hitch, there are five distinct areas employers should consider and resolve for their business.

1.    Take a long, hard look at data

A key concern amongst employers is the accuracy and validity of their employee and reward data. Many organisations believe they don’t have the ‘right’ level of data to put a sensible TRS together and therefore resist implementing total reward. But there’s really no reason why the most basic TRS couldn’t be developed for the business and with this foundation in place it’s possible to drip feed an enhanced version into the business as more detailed and in-depth data becomes available and employees demonstrate they’re comfortable and engaged with the concept of total reward.

2.    Think about who will manage and measure the programme

The ongoing nature of total reward programmes means they require strong project management and delivery skills. Is this something that can be provided in-house or is it something that an external party would be better placed to assist with?

3.    How will total reward be delivered?

Effective total reward is all about making the most of the communication tools available. Employers should review the techniques they are currently using and check whether they can be refreshed or updated to drive home the total reward message.

4.    Identify the right time to launch total reward

When to launch a programme is a critical factor that companies need to think about; if the timing is wrong and total reward communications are overlooked or disregarded by employees, then the effort and investment put into them is simply wasted.

One of the most popular approaches to this is to link total reward with the annual flexible benefits selection. Here, total reward serves as both a reminder of the rewards and benefits on offer, but also ensures employees have sufficient information to make the best selection for themselves and their circumstances.

5.    How best to value the rewards and benefits offered?

It is important to invest time as early as possible in the total reward programme to consider the value of benefits and decide on a process for ‘costing’ the offer. Employees, line managers and other stakeholders will be entitled to know how the value of an individual benefit has been measured, so time needs to be taken to decide on how to approach this.

Andy Philpott is marketing director at employee benefits, rewards and incentives provider, Accor Services



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