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Total Rewards in Today’s Terms


Pay equity and transparency, hybrid work, mental health benefits, human capital disclosures, the future of work, third party administrators, CD&A, broad-based compensation, market pricing, Radford data, Mercer data, short- and long-term incentive plans…


All these aspects lead to the Total Rewards (TR) function: the current list of priorities, the regulatory landscape, the complexity of solving what are often multivariate problems, and the pace of the talent market.


Let us look at the Total Rewards function and why it’s so important.


What Is the Total Rewards function?


In its essence, the Total Rewards function assists business leaders in fully achieving their business goals and objectives. It also supports the development of a Total Rewards strategy to incentivize desired behaviors and performance.


Gartner defines Total Rewards as “the combination of benefits, compensation, and rewards that employees receive from their organizations. This can include wages and bonuses, as well as recognition, workplace flexibility, and career opportunities.” Total Rewards can also refer to “the function or department within HR that manages compensation and benefits, or the combined intrinsic and extrinsic rewards (or value) that an employee perceives.”


Regardless of the Total Rewards definition you use, the value of this function is undeniable in a talent market where 68% of employees have openly stated they would consider making a career change in the next 12 months, and 50% of them highlight compensation as a primary motivation for making a move, according to a survey conducted by Flexjobs.


As proven by numerous searches for clients, great Total Rewards executives are transformational leaders. I once heard them referred to as “Scientific Artists” because they must be strong in both analytical skills and creative thinking. Great Total Rewards executives also thrive on the technical aspects of their chosen career while maintaining a vigilant eye on the regulatory landscape—all of which represents “the science.” Beyond this, they play a role in business goal achievement by keeping their finger on the pulse of industry and market conditions, organizational culture, the Employee Value Proposition (EVP), and company talent requirements.


What Does a Total Rewards Program Look Like?


A Total Rewards program involves balancing several factors, keeping up with their trends and markets, and synthesizing them into a competitive package. Therefore, because of its nature, envisioning a TR program requires asking the right questions.


A study from Gartner suggests answering four core questions when building a Total Rewards program:

  1. What does a high-performing Total Rewards function look like?
  2. How can the Total Rewards leader/department partner with the business more efficiently and effectively?
  3. What people and skills do you need on your teams today to get your influx of new or rapidly shifting work done?
  4. How do you measure, and in turn show, the Total Rewards impact on enterprise objectives?

A Total Rewards program should balance “actual” compensation and other benefits along with a system that allows staff to effectively answer requests from interested parties—from employees to business leaders and beyond.


Prioritizing customer service is a crucial component of a successful Total Rewards program. According to Gartner, only 37% of Total Rewards leaders are satisfied with how their internal team handles customer service overall. When discussing compensation, the satisfaction rate drops lower—down to twenty percent. However, customer service is critical to Total Rewards because an effective service strategy for internal customers offers tangible proof to employees demonstrating they are appreciated.


What Does a Total Rewards Leader Do in HR?


Total Rewards is often complex. A true TR leader needs to be flexible, innovative, and creative. There are many elements to understand, and it takes analysis and insight to identify what works and what needs improvement.


Research from Gartner highlights three overarching ways in which Total Rewards must function within HR and within the context of overall corporate changes:


  • Culture change: Ensuring that rewards packages reflect any shifts in overall HR strategy.
  • Restructuring: Adjusting compensation plans to reflect talent priorities and shifts in market forces.
  • Market expansion: Developing and negotiating salary packages for previously unseen and newly created roles without prior market comparison.


These overarching topics display why Total Rewards is a crucial part of HR because shaping corporate culture, attracting and retaining talent, developing roles, and keeping up with the market all play critical roles in HR initiatives.


A Total Rewards leader doesn’t only oversee these functions. They must also communicate the value of the department’s function and what it needs to improve. Consequently, Total Rewards can be easily overlooked by those outside its niche. A leader should be a strong communicator in explaining the department’s processes, limitations, potential, capabilities, etc.


Why Is Total Rewards So Important?


Total Rewards focuses on how well the company materially expresses its appreciation for its employees. A positive rewards experience demonstrates that a company values its employees and their contributions. It also demonstrates that a company understands that employment isn’t only about paychecks; it’s also about other benefits—non-financial perks, career development, encouragement of work-life balance, and more. Organizations that hone their Total Rewards function will stand out as a place where employees want to work and stay.


Total Rewards can be essential for motivating employees to perform well and continue advancing. A 2018 analysis from SHRM reported on “next-generation” rewards, which “emphasize well-being by offering benefits that address financial wellness, fitness, stress relief, mindfulness, and work-life flexibility.” Total Rewards can be a tool for a company to prove they have a caring culture around the employee’s whole self. A strong and well-rounded rewards package can make a significant difference in attracting talent and strategic retention in a competitive job market. A satisfied employee who considers they are being treated fairly is more likely to give their best performance than an employee who feels unappreciated and should therefore give the bare minimum in return.


Total Rewards helps find the balance between managing costs and remaining competitive in the market. That balance also involves managing the effects of inflation. In a 2021 survey, Gartner revealed that 37% of organizations plan to “factor inflation into” their compensation budgets or decisions. However, only 13% plan to increase pay for all employees due to inflation. Total Rewards should be a part of managing employee expectations and satisfaction around raises and inflation. Transparent communication and a balanced benefits package—one that includes more than just base salary—are key to maintaining employees informed and satisfied.


When it comes down to it, balance and satisfaction are essential to Total Rewards. It is a function connected closely to business operations; yet it is often not as well understood as it should be. A top Total Rewards leader can synthesize these factors and create solutions that everyone—from the top down—can be happy with. When armed with an excellent leader, Total Rewards can become a company’s secret weapon for employee satisfaction, and ensuring a competitive position in their market.



By Ruben Moreno


About the Author

After a 25-year career in Corporate Human Resources and HR Executive Search, Ruben Moreno and his two partners co-founded Blue Rock Search based on a simple but ambitious vision of creating a firm that would “Change Lives and Organizations One Relationship at a Time.”  Ruben leads the Blue Rock HR Executive Search practice specializing in the identification, assessment, recruitment, and onboarding of Chief HR Officers and Chief Diversity Officers and their respective teams — inclusive of leaders in Talent Acquisition, Total Rewards, HRBP’s, Learning & OD, HR Technology, HR Operations, and HR Analytics. Ruben has helped place hundreds of HR Executives and built deep relationships within the CHRO community across multiple industry verticals. His clients consider him a trusted partner who takes the time to understand their business and add value beyond executive search.

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