The power of total rewards

Communication is key

Do employees fully understand the “total deal” in working for their employer? Do they recognize that the value of working for their employer consists of an array of tangible and intangible rewards? Even in considering just the tangible aspects of their rewards package, can they cite the dollar value? The answers to these three questions are typically no, no and no.

To effectively communicate total rewards, employers need to connect the dots between rewards and recognition and the overall business strategy.

But total rewards is more than just a packaging exercise. As much as it needs to be communicated in an integrated fashion, fundamentally, the total rewards design should support business goals. The bottom line: Does the organization have an integrated total rewards design or merely a group of parallel programs?

Employees want a holistic picture

Although rewards and recognition are key drivers of employee engagement, employees are looking at the more holistic picture of their employment deal — what’s in it for them? The work itself, and the opportunities for development, often rank higher than traditional rewards. The same holds true for a work environment where there is trust and confidence in leadership, the overall business strategy and leadership’s ability to execute this strategy.

Employers are struggling to articulate the value of total rewards and, as a result, the package doesn’t get the full recognition it deserves from employees. Additionally, when attraction and retention are a challenge, an employer’s first instinct is to put more money in the rewards program without first stepping back to effectively capture and communicate the total value of the current program.

Many employers in Alberta’s booming oil and gas sector, when struggling to recruit and retain talent in one of the hottest labour markets ever, are resorting to pumping big dollars into rewards programs. Short- and long-term incentive programs, traditionally reserved for senior-level employees, are being offered to almost all employees and are quickly becoming organization-wide “golden handcuffs” in the West.

That’s because the average rank-and-file employee doesn’t understand these incentive programs or their value — particularly the long-term incentive programs. Helping employees better understand what they have in an overall total rewards context is a much more prudent and pragmatic first step to dealing with this dilemma, as opposed to sinking new money into these programs.

What’s included in a total rewards offering?

In North America, the percentage of companies articulating and communicating their rewards as a more robust offering grew from 28 per cent to 55 per cent in 2006, according to Mercer’s Snapshot Survey: Measuring Total Rewards, a survey of 263 employers in Asia, Europe, Canada and the United States. Expect this share to grow even bigger as employers connect the dots between the drivers of employee engagement and what matters most to employees.

So what’s in and what’s out in developing a total rewards program communication strategy? This begs several more questions, all of which can be answered through good, old-fashioned employee research:

•How much do employees understand the current total rewards program?

•Do they understand the value of the program?

•What matters most and what matters least?

•Is there a clear connection for employees between their employment deal, the overall business strategy and what’s expected of them to help implement this strategy?

•Can the tangible and intangible awards be categorized?

•How and where is total rewards communicated?

Having answered these basic questions, organizations may then categorize their various employee offerings to help explain their total rewards program in a holistic way that will resonate with employees (see sidebar below).

Personalized communication

To maximize its value, ensure the program resonates with every employee.

“Employers of all sizes see real value in answering the question ‘What’s in it for me?’ for their employees,” said Sylvia Ektvedt, a senior consultant in Mercer’s North American personalized communication centre, located in Toronto. “Our personalized total rewards communication services business has doubled over the past few years. This is partially due to a demand for executive compensation statements driven by a focus on transparency, but employers see personalized communication for all employees as valuable in the management of rewards as well.”

Be it in the form of print or online statements, or robust online total rewards websites that feature online modelling tools, personalized communication lets companies provide employees with a clear picture of the rewards of working for their organization. Many employers see this as an effective means to help ensure a more effective return on investment in employee compensation.

Future trends

Some interesting trends are emerging with respect to total rewards communication. Personalized communication statements are now being developed as a look forward versus a look-back snapshot. The statements are integrated into the annual compensation process and can be a valuable tool for managers in their annual performance review and planning process.

Some companies are pushing the envelope even further by issuing quarterly equity statements. Others are offering a suite of e-communication tools that let employees model their potential total wealth through employer-based equity offerings at different intervals in time and based upon different estimated future rates of return the company may achieve.

Jodi Macpherson is worldwide partner and Canadian communication business leader at Mercer Human Resource Consulting. She may be reached at [email protected].

An inventory
Categorizing a total rewards program



•prescription drugs;



•spending account;

•occupational health;

•income protection (life, accidental death and dismemberment, disability);

•wellness programs;

•health plan decision tools;

•resources for managing sickness, health;

•employee assistance program;

•enrolment; and

•claim centre.


•pay (base pay, bonuses, commissions, overtime, other cash compensation);

•profit sharing;

•stock options;

•pension plans;

•employee stock purchase;

•income protection (short- and long-term disability);

•executive perks; and

•personalized statement.


•job performance (company/team goals, individual goals, progress, year-end results, pay for performance);

•career development (competencies, career paths, job board);

•training and learning (tuition, training calendar); and

•employee referral program.


•services and discounts;

•service awards;

•matching gifts;

•community service;

•adoption assistance;

•employee assistance program;

•flexible work arrangements; and

•time off (vacation, holidays, sabbaticals, sick days, leaves),

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