What is Total Rewards? 5 basic components in Total Rewards

What is Total Rewards? This is one of the concepts that businesses need to know and understand during their business process. In this article, 1C Vietnam will explore with you the above concept and the 5 basic components of Total Rewards, thereby clarifying their importance and impact on employees and businesses.

1. What is Total Rewards?

Total Rewards is a concept in human resource management that refers to all the benefits and benefits an employee receives from the organization they work for. This includes not only salary and bonus factors but also career development opportunities, working environment and other support policies that the organization provides to compensate and attract personnel.

2. The role of Total Rewards for businesses

Total Rewards plays an important role in the growth and success of a business from many different aspects:

• Attract and retain talent: Attractive Total Rewards helps attract quality employees and retain talented people within the organization. When a business has a good compensation and benefits system, employees will feel appreciated and valued, thereby sticking with the company for a longer time. .
• Increased engagement and performance: Besides increasing employee satisfaction, good Total Rewards also motivate them to work more efficiently and productively. When receiving fair compensation and development opportunities, employees tend to commit and actively contribute to the success of the business.
• Promote innovation and creativity: When employees feel motivated and supported, they can be more confident to come up with new ideas and participate in the innovation and creativity process within the organization.
• Contribute to a positive organizational culture: Total Rewards plays a role in building a positive organizational culture by creating a work environment that encourages, supports and motivates employee development.
• Create competitive advantage: Attractive Total Rewards helps businesses compete better in attracting talent from other organizations. It can be the deciding factor in which company a candidate chooses to work for.
• Integration training: The Total Rewards system creates conditions for new employees to easily integrate into the corporate culture, while motivating them to confidently devote themselves to improving work efficiency.
• Internal training: Through the implementation of internal training programs, Total Rewards System will support employees in expanding their knowledge and skills. This results in improving the professional capabilities of each individual within the organization.

3. Basic components in the Total Rewards system

Total Rewards includes many key components to enhance and promote employee satisfaction. The main components in this system include:

3.1 Remuneration system

The salary system usually includes salaries, bonuses, and allowances for employees. Every employee, in every position and role, has their own goals and expectations regarding income. Therefore, the role of the salary system is very important in the Total Rewards system. Setting up a Total Rewards system helps businesses build a clear, specific and transparent salary system that fully reflects the basic and necessary requirements of each employee.

3.2 Policies and benefits

In the Total Rewards system, policies and benefits play an important role in creating favorable and reliable conditions for employees. They include a series of regulations and benefits that employees enjoy from the work organization. These policies often include provisions for compensation, health insurance packages, health care, accident insurance, vacation, and family support programs.

In addition, this policy also includes non-paid benefits such as flexible working, career development opportunities, a comfortable working environment, team building activities, life and retirement benefits. mind. In addition, depending on each business, there may be other benefits such as lunch allowance, Friday afternoon tea-break, birthday,...

3.3 Work-life balance

This is a necessary support policy for every business, ensuring employees can work effectively and productively. Elements such as flexible work, remote work programs, or policies that allow flexible work hours can help employees better manage their work and personal time.

In addition, flexible leave policies, health care and family benefits also play an important role in helping employees maintain an effective work-personal life balance.

3.4 Performance recognition

Recognition of work performance is an extremely important factor as employees will feel that their work is recognized and appreciated. When employees feel their work and efforts are properly appreciated and rewarded for their achievements, they tend to feel more motivated and committed to the organization.

Recognition through performance bonus policies can be monthly, quarterly or yearly in the form of: rewarding the best employees, encouraging employees or departments if they exceed set targets...

3.5 Career development opportunities

Career development opportunities are also an important factor in attracting and maintaining talented personnel. This is not just about providing training and learning support but also involves creating an environment that allows employees to develop and progress in their careers. This not only motivates employees but also increases the attractiveness of the business in the eyes of potential employees.

Having a good Total Rewards system also means providing opportunities for advancement and career development, from career training to promoting work experience and innovation.

4. How to build an effective Total Rewards strategy

Building an effective Total Rewards strategy requires careful consideration and detailed planning to ensure that the system's components reflect the organization's goals and core values. Here are the important steps to building an effective Total Rewards strategy:

Step 1: Overall assessment of Total Rewards status

Before building any strategy, businesses need to evaluate the current personnel and company situation through the following factors:

• Benefits the company is providing to employees.
• Compare the company's Total Rewards level against its competitors and the overall market.
• Survey employee satisfaction with the benefits the company is providing.
• Find out what incentives and benefits are most popular and feasible to implement at your business.

Step 2: Find out what employees want from Total Rewards

After making initial assessments, businesses need to learn about employees' wishes about the company's Total Rewards system. Of course, each employee will have different needs in terms of compensation and benefits that they desire. Therefore, to be able to solve this, you can conduct surveys (online or offline) for employees to find the right answers.

Step 3: Chart the Total Rewards components

In this step, you need to chart the components needed in the Total Rewards system based on the actual conditions of the business in terms of human resources, scale, costs, etc. However, there need to be 2 main components. is what businesses can provide and what employees want.

In the process of charting components, there are some things businesses need to keep in mind:

• The selection of Total Rewards components needs to be done fairly, publicly, and transparently.
• Leaders need to pay attention to choosing Total Rewards that can bring motivating value to employees and at the same time be consistent with the overall development goals of the business.

Step 4: Choose the appropriate Total Rewards component

After charting the initial components, the next step is to compare with factors such as strategic goals, costs, etc. to choose the appropriate Total Rewards components. Typically, the decision about which Total Rewards components to use within a business will be considered by senior management and involved in the selection process after much discussion.

Step 5: Implement Total Rewards and measure effectiveness

The Total Rewards system also needs to measure effectiveness after implementation. Some indicators and information through which you can most accurately evaluate and measure the effectiveness of Total Rewards for your business:

• Employee retention rate
• Employee performance
• Employee satisfaction level
• Level of commitment to the organization
• Build employer branding
• Number of employees quitting
• Cost of health care insurance packages for employees

5. Difference between Total Rewards and C&B

Total Rewards and C&B are two concepts related to the field of human resources management and employee compensation, but they have specific differences as follows:

6. Future Total Rewards trends

So, what are the upcoming trends of Total Rewards ? 1C Vietnam will introduce to you 6 trends that you can refer to and update for your business's Total Rewards system. Include:

• Focus more on employee health: Businesses need to update incentives and benefits related to employee health. One emerging issue is increased employee burnout, which can impact a company's revenue. Therefore, updating health-related benefits to a business's Total Rewards strategy is extremely necessary.
• More personalization and flexibility: Benefits programs tailored to meet employees' individual needs have the potential to increase retention rates by up to 78% (according to WTWCO). At the same time, the emphasis on flexible benefits packages has increased in the field of human resources management recently.
• Applying technology in Total Rewards management: Total Rewards includes a wide range of benefits and incentives. Each type of compensation and benefit has distinct management methods, and this can create specific challenges when applying traditional management.
• Focus on promoting corporate culture: In case a business's working culture is negatively oriented, up to 71% of employees will look for new job opportunities at other organizations (according to Glassdoor). Therefore, paying attention to organizational cultural factors in building a Total Rewards strategy is extremely important for each business.

Above, 1C Vietnam has shared details about the concept of Total Rewards . In the process of managing the Total Rewards system, to increase efficiency, businesses can use 1C:Company Management software. This is a comprehensive solution that helps automate business administration, enhance human resource connections, and flexibly manage salaries and employee benefits. Contact 1C Vietnam today for advice and support on suitable solutions for your business!