The total rewards function is critical to the smooth operation of HR, especially in competitive talent marketplaces. Ensuring the right balance of culture, compensation, and career development can make or break an organization’s ability to attract top talent and retain them in the long term.
As employee priorities shift, so must your total rewards strategy. That’s where a total rewards audit can be invaluable. An effective, thorough audit can reveal critical information about what your employees really want and need, where your current strategy is succeeding, and where your approach could use some adjusting.
A chief human resource officer (CHRO) or total rewards leader might conduct a total rewards audit in pursuit of several goals. The following are some of the most common:
1. Ensuring Competitive Compensation and Benefits
This is the simplest and most obvious reason to audit your total rewards function. A thorough audit can ensure the organization’s compensation and benefits packages are competitive within the industry, thus, helping to attract and retain top talent. Your audit can give you a broader industry perspective and keep your talent strategy competitive by benchmarking the company’s rewards against industry standards and competitors.
2. Aligning with Organizational Goals
Your total rewards strategy should be an extension of your overall business goals, but is it currently? Your audit should consider whether the total rewards strategy aligns with the organization’s overall goals and objectives, such as promoting a culture of innovation, collaboration, or customer focus. It’s also a great opportunity to confirm that your rewards are clearly connected with desired performance outcomes while they encourage behaviors and achievements that drive the company’s success.
3. Compliance and Risk Management
Your industry laws and regulations must also play a role in your total rewards function. An audit can confirm compliance with all relevant laws and regulations regarding compensation, benefits, and employee rewards. This simultaneously allows you to identify and mitigate any risks associated with the current total rewards strategy, such as potential legal issues or financial liabilities.
4. Cost Management
An effective total rewards strategy isn’t just about what you can offer employees, it’s also about how those offerings fit into your overall budget. Conducting an audit allows you to better analyze and optimize the costs associated with compensation and benefits, ensuring the company is getting the best value for its investment in employee rewards. Ultimately, your audit and analysis can help ensure that the total rewards expenditure aligns with the company’s overall financial goals and budget constraints.
5. Employee Satisfaction and Engagement
Your total rewards function is a cornerstone of creating great employee experiences that encourage productivity, engagement, satisfaction, and loyalty. You’ll have the perfect opportunity in your audit to solicit and incorporate employee feedback and satisfaction levels regarding compensation and benefits, ensuring that the rewards offered are meaningful and motivating to employees. The desired outcome will be a boost to overall employee engagement and morale by presenting a total rewards system that is perceived as fair, competitive, and aligned with employee needs and preferences.
6. Identifying Gaps and Inequities
Everyone should feel engaged and rewarded by the total rewards function. Is your approach inclusive of the wide array of individual experiences in your employee community? An audit can help identify and address any inequities in your rewards system, focusing on fairness across different groups while promoting diversity and inclusion overall. This means uncovering which elements are currently working and noting gaps in the current rewards program so you can make the necessary adjustments to meet the evolving needs of your workforce.
7. Future Planning
Your total rewards strategy is a key element in your overall approach to bringing your organization into the future. To better prepare for tomorrow’s workforce trends and changes, a semi-regular audit can futureproof your total rewards strategy, focusing on adaptability and agility to meet the needs of a dynamic and changing workforce. It’s also a powerful tool for supporting long-term talent strategy, including succession planning, upskilling, and career development initiatives.
Conducting a total rewards audit allows CHROs and total rewards leaders to look comprehensively at the organization’s compensation and benefits strategy, identify areas for improvement, and make informed decisions that support both the workforce and the company’s strategic objectives. When you’re ready to perform your audit, turn to Blue Rock Search! Our signature total rewards audit includes more than 30 questions across seven key areas, giving you a 360-degree view of your program and its possible improvements.
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.