Total reward statements

Total reward statements are personalised documents that set out for each employee the full value of the pay, incentives and benefits they receive and an outline of the annual costs.

Research indicates they can be successful in organisations which:

• provide a wide range of non-cash benefits

• offer a fairly generous benefits package

• have high-quality employee data and well-maintained systems

• have or are planning to introduce flexible benefits

• are undergoing major change, e.g. merger or acquisition, and need to deliver targeted rewards information to explain new reward packages.

Although relatively few organisations – less than 20% – provide total reward statements according to CIPD’s Reward Management survey, a growing number of organisations are increasingly keen to communicate their overall ‘employer value proposition’ to highlight the broader value and advantages of being employed by their organisation.

When putting together a package of benefits for a total reward statement, companies should also cost out less obvious non-financial benefits such as training, learning and development, flexible working, employee counselling and facilities such as car parking.

Tailored to individual needs

Reward system planners have moved away from a purely financial approach towards benefits packages centred on individual preferences, where the keynote is flexibility and employers value the individual rather than merely ‘pricing’ the job. One advantage of being able to use more than salary alone to reward employees is that you can link up with other businesses to offer benefits. Tax law, your creativity, and your budget are the only limits to what can be offered.

As the workplace becomes more diverse, the standard provision of benefits in which everyone receives broadly the same is becoming a thing of the past. Employees are increasingly being given greater choice over which benefits they receive, through flexible or ‘cafeteria’ benefits schemes in which they select those that most suit their current personal circumstances. The advantages include:

• ability to adapt to a changing labour market

• better targeting of benefits

• enhancing employer branding

• raising awareness of the value of the complete reward package to staff.

The ‘psychological contract’ is also becoming increasingly important, with signs that some employers are now offering different ‘value propositions’ to different types of employees in a similar vein to the shift from output-based reward – pay for performance – to rewarding competencies and skills inputs (see article 11 onwards).