Technology in Total Rewards

Total Rewards

Total rewards are financial and non-financial remuneration used to attract, motivate and retain employees in exchange for the services they provide to the company. Let’s review the five components of the total rewards system:

1. Compensation
2. Benefits
3. Work-Life Balance
4. Performance and Recognition
5. Career Development

Compensation

The largest expense for most businesses is the cash paid to an employee by the employer for services rendered. There are two types of compensation:

• Fixed Pay (base salary), which is non-discretionary compensation that does not change due to performance or results achieved. Pay levels reflect the market price for the specific labor market of the industry and job, and there may be regulatory minimums.
• Variable Pay is compensation that depends on individual, team, or organization performance that is based on the results achieved and the measurement period. Examples include merit pay, profit-sharing, commissions, bonuses, spot awards, and long-term incentives such as equity.

Benefits

Non-cash compensation that may be legally mandated or employer initiated. There are four categories of benefits that organizations will typically offer to their employees.

• Health care - varies by geography and culture and includes medical, dental, mental health, and vision plans as well as retiree health benefits
• Income protection - designed to maintain the standard of living for the employee when unplanned events occur that reduce compensation and can be mandatory depending on the country. It includes Unemployment, Worker’s Compensation, Social Security, and Welfare Benefits (e.g. Disability, Death Benefits, and Long-term Care)
• Retirement plans - include defined benefit plans where the employee doesn’t pay into the plan or defined contribution plans where the employee, employer or both make contributions to individual participant accounts such as a 401K.
• Paid Time Off (PTO) - pay for time not worked which most commonly includes vacations, personal leave and time off for health reasons.