Total Compensation & Total Rewards

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What is Total Compensation?

 

Many organizations use total compensation as a way to communicate the value of employment to their associates. The problem with using total compensation alone is that it doesn’t communicate the fullest possible value of compensation, because it typically only covers:

  • Base Pay
  • Bonuses
  • Equity
  • Stock
  • Health, wellness, life insurance
  • Benefits (Internet services, gym memberships, cell phone and service, company car/bus/train/plane, company discounts, university/ongoing education funding, etc.…)
  • Pension’s plans

·   While total compensation may vary from one company to the next, these are typically the core components that most organizations choose to focus on.

What is the meaning of Total Rewards?

 

Total rewards consist of everything that total compensation covers (base pay, bonuses, and equity), as well as much more. Your total rewards program can encompass medical, dental, vision, and other health-related benefits, as well as any other employee perks you may offer.

Your total rewards program can also factor in retirement and/or 401(k) plans, legally-mandated programs such as long and short term disability, vacation, and travel and expense compensation.

Five key areas of total rewards system

1.Compensation: In general, most employees regardless of title or role within the organization have an expectation regarding their compensation. There are a range of pay strategies that provide incentives and encourage retention.

2.Benefits: Health and dental insurance are what generally come to mind when discussing employee benefits. There are also many value-added benefits that can be offered within the insurance plans. Employee assistance programs, discounts on fitness programs and health incentive programs are also ways to expand the offerings to employees.

3.Work-life Benefits: Leaders are continually recognizing the need for employees to have opportunities to enjoy their personal time off. Incorporating social activities within the work day provides the feeling of down-time, while still on the clock.

4.Performance and Service Recognition: There was a time when employees worked their entire career for one employer. Although those days are long gone, employers are still seeking ways to recognize performance and loyalty to the organization.

5.Career Development: These are opportunities for an employer to grow individuals while they are with an organization. The individuals will also recognize that these skills can be used to propel them to new levels in their career.

 

The difference between Total Compensation and Total Rewards


 References


Comments

  1. Buddima BandaraJuly 18, 2020 at 12:35 PM

    What are the modern Compensation methods?

    ReplyDelete
  2. Supun HaddapitiyaJuly 18, 2020 at 9:13 PM

    How can we change these compensations with that COVID19 situation ?

    ReplyDelete
  3. Sajitha EkanayakeJuly 19, 2020 at 2:41 AM

    Hi Hasa, i heard MAS trying to getting rid of 3000 employees with this current senario, do you think its fair,where all of them are getting same compensation rather than considering how much they contributed to the organisation?

    ReplyDelete

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