The Elements of Total Rewards

The Aon Hewitt 2012 Total Rewards Survey defines total rewards as “everything an employee gets from the employer that they find rewarding.” It involves the following five key elements:

We strongly suggest consideration of the non-monetary rewards listed above. Human beings yearn to fulfill these higher level needs and reach their full potential; these are long-term motivators that build commitment. In addition, for jobs that require any level of cognitive ability (in the case of MFIs and social enterprises, this includes problem solving, building relationships, and serving clients to improve their lives), research shows that a traditional “carrot and stick” approach (if you do X, you get rewarded with Y—usually more money—or, if you don’t, you get punished) actually causes poorer performance. Instead, the most motivating factors are:

  • Autonomy – people want control over their life and work;
  • Mastery – people want to get better at what they do; and
  • Purpose – people want to be part of something that is bigger than they are.

Pro-poor organizations are especially well positioned to capitalize on employees’ desires for meaningful work and connecting to a purpose. Although it is not uncommon for employees to join an organization simply because they need a job, we have found that these employees often stay with an organization because of how motivating and rewarding the social mission is to them. Purpose is a powerful motivator. A total rewards system enables an organization to address both of these desires for employees—the need to satisfy basic human needs and the need for a higher level of fulfillment.

The term “total rewards” refers to the financial and non-financial return provided to employees in exchange for their time, talents, efforts and results. It involves the integration of five key elements that help to attract, motivate and retain employees. This toolkit will discuss each of the components of a total rewards approach in this way. We’ll discuss satisfiers and motivators to encourage you to think about all elements of total rewards (not just pay), and explore what will be most effective in motivating and retaining your employees.In this module you will find:

  • An overview of total rewards and each of the components
  • A framework to define and implement a total rewards strategy that recognizes and rewards desired behaviors and results in your organization
  • Tools and examples to enhance your implementation

How to Use Total Rewards

An effective total rewards strategy results in satisfied, engaged, and productive employees, who in turn create the desired business performance and results. The following model (adapted from WorldatWok.org “Total Rewards Model”) depicts the same. 

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