The precise total reward system definition is something that varies depending on where you look.
While each organization may define it differently, understanding what it means to your company will help you develop the strongest system to meet your specific objectives. Here, we take a look at a few different definitions of total rewards systems and help you translate them into a meaningful description to fit your company.
For one, Josh Bersin of Bersin by Deloitte defines total rewards as “the critical integration of an organization’s approach to incenting and rewarding its talent.” In other words, it’s the integrated system through which you reward and incentivize performance.
Another definition is provided by WorldatWork. They say that the total rewards model is “the dynamic relationship between employers and employees.” While that’s a very broad way of explaining total rewards, it does capture the true essence of what total rewards systems intend to achieve: a healthy and ongoing connection between your company and its employees.
Here at HRsoft, we define total rewards as everything that total compensation pay covers (including base pay, bonuses, and equity), as well as benefits and any other employee perks your company offers. This is where the meaning of total rewards starts to differ for each organization.
While some companies offer competitive starting pay with limited healthcare benefits, others might pay right at market value but offer a robust benefits package. The total reward system you use will depend on the types of outcomes you’re trying to achieve.
For instance, if your goal is to reduce turnover, your total compensation package might feature outstanding training and development opportunities. If you’re trying to attract top talent, you might look at the demographics for the skillsets you’re targeting to find out what those professionals value most in terms of compensation.
Although there is no single definitive explanation of what total rewards systems will look like for each and every company, you can use apply these general definitions to your organization to create a powerful rewards strategy built to support your most important talent priorities.
HRsoft is a leading provider of strategic talent management software that improves manager effectiveness and business results. Our full suite of cloud-based HR software solutions includes applicant tracking software, compensation planning software, total rewards software, stay interview software, performance management software, and content management software. For more information on our Total Rewards Software, click the button below!