top of page
  • Writer's pictureAlexa Skibitsky

Total Rewards and Compensation

Human Resources is based on the interactions between employee and employer, making it a complicated matter to manage. Using total rewards and compensation can be an important resource to view how employees are valued and provide insight into developing better plans for compensation.

The way that total rewards works is that it accounts for all the ways that compensation is given to employees both directly and indirectly. Thus, an employer is able to understand the relationships between different aspects of the workplace and use it to adjust compensation as needed. Some of the types of compensation that are taken into consideration for a total rewards approach are direct compensation and benefits like insurance, time off, and savings plans as well as the less direct performance management styles, work-life balance, and recognition. Each of these components might only affect one area of employer-employee relations in employment individually, but when viewed together as a whole they can provide insight into the valuation of employees overall. After this understanding is reached through total rewards, steps can then be taken accordingly to design a strategy that favors elements such as teamwork or retention.

In any organization, the first step to creating a compensation strategy based on total rewards is to identify all the forms of compensation including those previously listed. It is also essential to consider how current forms of compensation fit within those labels and the effect that they have on the organization. After that, a total compensation statement can be made that identifies all indirect and direct forms of compensation in order to increase transparency between employer and employee. Following that, it is recommended that an outside consultant be brought in to assist in implementing new strategies, but in general the following steps would involve creating components that work to the benefit of the chosen goals for the plan. It is important that the end result be a plan that is realistic and sustainable within the organization, but also reaches the goals of the strategy.

A total rewards approach to compensation can help to achieve a clear and realistic view of how employees are valued with an organization. By understanding the elements, you can then more clearly develop a strategy for approaching compensation that fits organizational goals and improves satisfaction.

Works Cited

Johnson, Blake. “Total Rewards and Compensation: Understanding the Essentials.” The HR

Gazette and HRchat Podcast, 5 Mar. 2019,


1 view0 comments
bottom of page