What Constitutes a Great Employee Total Rewards Package?
The transformation that has occurred in the workforce industry within the past few years has revealed that salary and benefits are no longer enough to constitute the total rewards package of employees. This is common knowledge that could be gotten from any Business School that offers payroll certification. In the past, employers have been challenged on several occasions to enforce employee motivation in terms of improved welfarism. In response to this request, organizations have always maintained their stance on increased productivity as a prerequisite to increasing its rewards package to employees.
With the increasing competitive business environment coupled with global economic challenges, it might be difficult – if not impossible – to adopt a one-cap-fits-all approach to rewards. Nevertheless, every business, irrespective of the size, needs the best talents to succeed and stay ahead of competition. Attracting and sustaining talented individuals require that business leaders or executives provide compensation benefits and features that can make the workplace desired by prospects.
Total rewards package encompasses features and benefits offered by an employer in return for an employee’s contributions to the organization. It is a totality of an organization’s value proposition to its employees. This includes both monetary and non-monetary rewards.
A comprehensive rewards system in human resource management in Malaysia usually comprises compensations, benefits, work environment, performance recognition, and career development.
These include the entitlement of an employee for their role within an organization. The first form of compensation is salary, which despite being determined according to the pay philosophy or structure of an organization must also be competitive. Beyond the base pay (salary), there is also the variable-pay system that rewards employees based on performance. It is variable because it changes as the performances of employees drop or improve.
Variable pay is divided into two: short-term incentive pay, which offers reward for performance over a maximum period of one year; and long-term incentive pay whose period of coverage extends beyond a year. Common forms of long-term incentive pay include forms restricted stock, stock options, performance shares, as well as performance units and cash.
Under employee benefits, there are insurances (health, life, dental, vision, etc.), retirement savings plans, and wellness programs. For instance, with the current outbreak of the COVID-19 global pandemic, organizations are becoming more interested in providing mental health resources, including tips to their employees.
Other packages such as vacation packages, paid leave, sick leave, or bereavement leave can make the organization attract top-notch employees. The overall goal is to give the employees a positive signal, especially as it concerns recognition of their organizational input as well as a show of concern towards them.
Good pay and benefits are not enough to motivate employees. Beyond the two, a work environment that helps employees to keep a balance between work and life will attract top talents. For instance, there is a need to ensure your organization has a flexible work schedule that allows employees to get enough rest when and where necessary. This will foster better morale and increase productivity. This offer may be made available to employees who have dependents under their care.
Some organizations go as far as offering a child-care facility for employees with minors. A favourable work environment might also include fitness facilities that are critical to wellness promotion.
As a means of enforcing manpower optimisation and boosting the morale of employees, organizations can also institute a system that borders on staff performance appraisal. This implies the recognition bestowed on individuals or teams as a result of their performances or the attainment of certain goals within a specified period. This involves appreciating individuals or teams with exceptional performances. The system of recognition may be as little as appreciation luncheons or awards of excellence.
In the current ever-evolving world, it is important that organizations do not take employees’ professional growth with levity. By improving the skills of your organization’s workforce, you get a reward of increased productivity. There are a significant number of career development efforts that could be put in place by organizations. Some of them include technology training, mentoring programs, seminars, among other employee development initiatives.
It has been revealed that employees appreciate a playing field that gives them the opportunity to help them improve their competency level. Unfortunately, this is an aspect of the total rewards package that is under-leveraged. By showing great concerns to employee growth, an organization provides for itself a win-win opportunity that includes building an organization that employees are proud of and might not want to leave. There is also the place of succession planning.
How to develop an attractive total rewards package
Creating a valuable total rewards package requires that you constitute a team of think-tanks – financial experts, certified payroll professionals, executive leaders, etc. – to evaluate your current rewards package in relation to your organizational goals. If the existing system has not helped your organization achieve its objectives, the need to enhance it becomes inevitable.
To do this, take the following steps:
- Identify and analyze different reward strategies to discover the one that suits your workplace. You may have to consider pay rewards, non-monetary benefits, manpower cost optimisation, and personal and career development opportunities.
- Upon discovery of a suitable package, reveal it to your employees with a concrete plan you have made towards its achievement.
- Educate employees on what they need to do to benefit from the program.
- The package should reflect flexibility to allow for future adjustments.
Organizations that fail to provide an appealing package to its employees may risk losing them. In fact, some even go as far as dismissing employees as they could not meet with their rewards package demands, and unlawful dismissal constitutes a wrongful act in Malaysia.
Business leaders with great foresight are embracing the total rewards package. By assessing their existing rewards programs, they are readjusting their offerings and packages to reflect a more holistic and attractive rewards system. The crux of the total rewards strategies is the adoption of a reward system that complements employee performances in the right proportion.