A total rewards system comprises all the efforts that an employer can use in recruiting, motivating and keeping employees. According to the Grameen Foundation, a total rewards system includes five elements: compensation, benefits, professional development, recognition and work-life balance.
Compensation refers to the various ways an employee earns money from the company. It typically consists of a base salary or hourly wage but can also include profit sharing and bonuses. Benefits refer to both mandatory programs and employer options. Mandatory programs include worker’s compensation and Social Security, while employer options include paid vacation time and pension programs.
Professional development encompasses a broad spectrum of learning and advancement opportunities, such as tuition reimbursement, mentoring and defined advancement tracks. For example, a business might cover the costs for everyone in a department to receive access to a relevant online course. Recognition ranges from an individual acknowledgement of work well done to a formal recognition program, such as an employee of the month or year program. Formal programs often include incentives, such as a plaque or prize.
Work-life balance refers to providing employees a chance to meet their personal obligations or goals. For example, some employers allow employees to come in early or leave late, so they can get their kids on the bus or attend their child’s events. Employers might also establish volunteer programs, offer a childcare subsidy or provide stress-management resources.