Human Resources Management: Total Reward Strategy Analysis

This essay delves into the principles and practical applications of total reward strategies within human resource management. It begins by defining total reward and its components, emphasizing the integration of monetary and non-monetary compensation to enhance employee engagement and organizational performance. The essay explores key elements such as pay, Local Government Pension Schemes, non-cash rewards, employee benefits, and total remuneration statements, highlighting their alignment with business goals and cost considerations. It then compares various total reward models, including compensation, well-being, benefits, career development, and recognition, discussing their advantages and disadvantages in fostering a motivated and satisfied workforce. Furthermore, the essay provides examples of how total reward strategies are applied in real-world scenarios, referencing companies like Amazon and Tesco PLC to illustrate practical implementation and outcomes. Overall, the essay provides a comprehensive overview of total reward strategies, emphasizing their critical role in modern human resource management.

Managing Human Resources
Managing Human Resources
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Managing Human Resources
Managing Human Resources
Managing human resources is a function performed by an organisation's managers relative to
its employees. Achieving a perfect working environment may be impractical; however,
organisations should align their objectives and visions to achieve the best working conditions
for employees. The effective way to ensure employee satisfaction and motivation are through
total reward schemes. This essay illustrates how a total reward strategy is applied to keep the
employees satisfied. Furthermore, practical applications of total reward in Amazon and Tesco
PLC are presented.
Total Reward Strategy
Total reward refers to a reward strategy that focuses on combining all organisation's
investments (Turnea and Prodan, 2020). The total reward is not just about base pay, but it
extends to the range of benefits in the employment package that supports the organisation's
culture and objectives (Turnea and Prodan, 2020). The ultimate aim of total reward is to
encourage and promote employee engagement to improve the general organisation's
performance. Besides, the employees get to choose and voice the total reward offerings and
enhance psychological contracts.
A total reward is often a long-term approach based on incremental changes rather than radical
changes. The process can be gradually introduced in inexpensive ways through properly
comprehending the employee reward preference and communicating what is already in place
(Turnea and Prodan, 2020). Total rewards entail both monetary and non-monetary forms of
compensation which ensure employees value the totality of their employment packages.
Even though the total reward has emphases on employee proposition aspects, base payment
remains the foundation. A total reward strategy can only be successful if the managers are
genuinely engaged in positively and regularly promoting the scheme. Ensuring a positive
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Managing Human Resources
work environment that enhances commitment and trust offers employees an opportunity for
growth, development, and empowerment to perform effectively (Hook and Jenkins, 2019).
Consequentially, the well-being of individual employees and organisational success is
ensured. Designing and implementing total reward packages require proper assessment of
possible risks and adequate planning.
Evaluation of Key Elements of Total Reward Strategy in Alignment with Business
Goals, Cost, and Future Intents
Organisations have unique structures, which means that a total reward approach may be
successful in one organisation, but fail if copied by another organisation of a different system.
Therefore, the course needs to be tied to the objectives and needs of an organisation (CIPD,
2019). However, some common aspects of total reward include pay, Local Government
Pension Scheme, non-monetary bonuses and recognition, employee benefits, buying and
selling annual leave, and total remuneration statements. The elements of each aspect can be
introduced individually, depending on what the organisation’s management feels is right.
Pay
An organisation’s reward strategy should assure the necessity of non-discriminatory and fair
pay. Besides, the compensation needs to reflect the external market for retention and
recruitment and correlate pay and employee performance (CIPD, 2019). Employers tend to
focus on intangible rewards such as challenging work, career development, and motivational
leadership to boost employee engagement, other than paying more for employee performance
and retention. As far as pay is concerned, organisations should review their strategic
approach to pay and reward in light of the possible future challenges (Hook and Jenkins,
2019).
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Managing Human Resources
The Green Book provides frameworks for organisations to develop their pay approaches and
proceed according to their specific strategies (CIPD, 2019). For example, the Green Book
gives various organisations discretion over pay rates to adjust to their respective local
markets. Additionally, the Green Book has no preclusions to pay related to performance nor
withholding increments. However, the organisations which desire to explore such options
must involve the local Trade union colleagues. If the pay structure remains relevant after
reviewing the strategy, the organisation may then communicate and reinforce the policies in
their various preferred ways.
Local Government Pension Scheme (LGPS)
The LGPS is issued to employees by the authorities who pay for large portions of the cost of
providing a good range of benefits, making it a valuable part of the employee package (CIPD,
2019). Besides highlighting the value of the pension scheme, the total reward approach also
trades off other aspects of the reward package. Most organisations in the private sector
indicate the employer’s contribution to the pension scheme in the total payment statements.
The LGPS is, however, a defined benefit rather than a defined contribution scheme.
Organisations contribute to the pension fund issued by their respective local pension funds
authority.
The rate of employer contribution is subject to increase or decrease depending on the funding
level at the time of valuation (CIPD, 2019). The employer's contribution can be reduced if the
fund's assets relative to its liabilities have risen. Conversely, if the investments have gone
down close to the liabilities, there is an increase in the employer contribution rate. Showing
the employer contribution rate on the total remuneration can make the employee think that
their pension is directly proportional to the level of employer rates, which is not the case. The
employer contribution rate does not affect the benefits paid to the employee.
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Managing Human Resources
Non-cash Rewards and Recognition
Motivating employees require the reward to be viewed as meaningful and motivational by its
recipient. Non-monetary rewards may include an employee of the month awards and thank
you letters and notes (CIPD, 2019). A range of rewards may appreciate positive work
behavior by employees. Such positive work behavior involves high levels of attendance,
innovativeness, attaining long-term goals, and improving organisational efficiency. It is
necessary to ensure that the benefits are inclusive for all employees when deciding the kind
of rewards to offer. For instance, an overnight meal offering may not favor employees with
childcare responsibilities. Therefore it is the responsibility of the organisation to manage all
incentives non-discriminatorily.
Flexible and Voluntary Employee Benefits
The flexible and voluntary benefits can be paid to both the employee and the employer. Some
organisations term these benefits as flexible benefits schemes (CIPD, 2019). The schemes
include cash-back schemes, childcare vouchers, private medical insurances, dental
insurances, buying and selling leave, and travel insurances. These schemes are aimed at
employee attraction and retention, acknowledging diverse workforce requirements, creating
awareness on benefits offering, and promoting salary savings. Besides improving employee
engagement, the employee benefit schemes also help manage possible impacts of complex
changes like low pay awards.
Achieving great success requires organisations to brand the benefits in ways that align with
the organisation's values. Organisations should ensure that the benefit schemes reflect their
values, giving employees a variety of reward options from which to choose and complement
their situations (Goetsch and Davis, 2018). It is relatively cheaper for organisations to set
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Managing Human Resources
lucrative voluntary benefits for employees due to the possible savings made through product
discounts, leisure activities, and services. Organisations may use the services of third-party
benefits providers to set plans for discounts for employees, thereby relieving the
administrative pressures.
Buying and Selling Annual Leave
Organisations should strive to help employees achieve a healthy work-life balance by
offering them the option to buy annual leave. The benefits on offer should be as fair and
transparent as possible. If organisations can justify that access for some groups of employees
cannot be granted for the annual leaves, it would be considered acceptable (Goetsch and
Davis, 2018). For instance, teachers cannot buy this kind of service leave due to the potential
damage to the service industry. Such schemes, however, only work when there is an
environment of trust between the employee and the employer.
Total Remuneration Statements (TRS)
The TRS gives the monetary value of benefits such as pension, salary, and medical insurance
schemes. TRS are personalized, enabling employers to raise employee awareness on
investments. Organisations may opt to produce TRS without changing the existing
employment package (CIPD, 2019). The TRS provides a good beginning for overall total
reward. However, the production of the statement may be challenging due to difficulty in
giving online reports for large portions of employees off office, high costs of implementation,
and inaccuracies in employee data. Organisations applying this approach need to be cautious
in expressing the local government pension value.
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Managing Human Resources
Comparison of Total Reward Models and their Relative Advantages and Disadvantages
Total reward models refer to a range of monetary and non-monetary rewards which aid an
organisation promote and enhance its reputation as a good working environment (Hook and
Jenkins, 2019). In addition to a great deal organisations have to offer; the total reward models
help ensure the employees fully value the totality of their employment packages (Bussin,
Pregnolato and Schlechter, 2017). The total reward model comprises five components,
inclusive of practices, programs, and nuanced dimensions, all of which collectively define an
organisation's criteria to construct a motivated and engaged workforce.
The total reward models include compensation, benefits, development, recognition, and
workforce well-being. However, these models also encompass a range of standard
components of pay and benefits packages such as supportive line managers, ability to raise
matters of concern, flexible working options, involvement in decision-making, transparency
in reward processes, fairness, recognition of achievements, meaningful work, freedom and
autonomy, access to professional development, and flexible benefits (Bussin, Pregnolato and
Schlechter, 2017). The primary total reward models are:
Compensation- This refers to the payment provided by an organisation to its employees for
their services in time, effort, and talent (Hook and Jenkins, 2019). The payment is inclusive
of both variable and fixed pay tied to gross contributions. Compensations require
compensation plans, which entail salaries, benefits, wages, how they will be paid, and the
purpose of their payment, employee bonuses, salary increments, and incentives (Bussin,
Pregnolato and Schlechter, 2017). An example is a variable-pay system that rewards
employees according to performance. Considering that many employees are unaware of the
costs to the employer of benefits, employers can provide employees with total reward
statements emphasizing the value of the basic pay and other benefits packages. Using
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Managing Human Resources
compensation to reward employees may however, be used by some employers to illegally
reward even the non-performing employees (Madhani, 2021).
Well-being refers to the productive, happy, comfortable, and healthy state of the
organisation's employees. It also takes factors such as the employees' mental, emotional,
environmental, and physical well-being into consideration (Mayimela, 2019). The
organisation is responsible for building programs supporting both the internal and external
workforce success. The work environment needs to promote a healthy balance between work
and private life. Such an atmosphere fosters better morale and employee wellness. Both the
short-term and long-term incentives attract, motivate, and help in retaining top-notch
employees and simultaneously meeting employee needs and priorities.
Benefits- These are programs focusing on income protection, financial readiness, health and
welfare, time off, and retirement to issue holistic security for the employees and their families
(Hook and Jenkins, 2019). Organisations may seek benefits beyond social security insurance,
unemployment insurance, medical insurance, state disability insurance, and Medicare
(Mayimela, 2019). Introduction of vacation and leave of absence packages are likely to
attract highly professional employees. The focus of the benefits is to make employees view
the benefits positively on offer. This model enhances an organisation's reputation as an
employer of choice through its ability to give value to the broader non-monetary benefits of
working for that particular organisation (Madhani, 2021).
Career development- This entails opportunities and rewards organisations offer the
employees, focusing on advancement in responsibilities, contribution, competencies, and
skills (Hook and Jenkins, 2019). These development opportunities ensure both the long and
short-term improvement of employee career and professional goals (Bussin, Pregnolato and
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Managing Human Resources
Schlechter, 2017). Offering professional development fosters employee loyalty,
consequentially advancing the organisation’s workforce skills. The opportunities may include
tuition assistance, seminar time-offs, mentoring programs, and technology training. This total
reward model aid the organisation’s management in communicating its employee value
proposition effectively.
Recognition- This includes programs to recognize, thank, validate, and celebrate employee
contributions. The recognitions could either be formal or informal, as long as they are aligned
with the visions and the organisation’s culture (Bussin, Pregnolato and Schlechter, 2017).
Peer and team recognitions voted by an employee’s colleagues boost morale by isolating
commendable performances. That way, employees remain motivated and strive to achieve the
organisation’s objectives, knowing that their hard work will be recognized, appreciated, and
rewarded. However, most employees believe that it is better to integrate pay benefits than
non-monetary rewards in a total reward scheme, hence this model, is not highly regarded by
employees.
These models, collectively, have some drawbacks, as illustrated by the Reward Management
Surveys. The potential disadvantages of the total reward models include the cynicism that
some employees might have that total reward is just a cost-cutting scheme by an organisation
(Madhani, 2021). Additionally, some rewards may be easier to offer than others. For instance,
most employees prefer offices with window views, which might be hard to provide in-office
spaces with finite accommodation and limited resources.
There is also a challenge of weighing reward values against one another, which may confuse
employees by issuing too much reward information and choices. Employers may also be
tempted to shift the reward mix from pay to lower and non-monetary forms of benefit.
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Total Reward Practices for Attracting and Retaining Specialist-Skilled Talent
Fair salaries and meaningful titles play crucial roles in attracting and retaining employees.
However, these alone can easily be superseded by competitor organisations. All organisations
seek to attract and retain skilled and talented employees, thus enticing potential employees
with exclusive offers. Practices that may be used in the total reward model to attract and
retain specialist-skilled talent may either be abstract or concrete.
Concrete Benefits
An organisation may introduce tangible benefits, which include but are not limited to
retirement saving options and variable pay, as a way of attracting and retaining skilled-
talents. Variable pay refers to the kind of compensation that changes relative to the specified
level of performance or achieved objectives. It may be used as a bonus, mostly issued at the
end of the year, but can also be used as often as desired (Turnea and Prodan, 2020). Besides,
the short-term incentive pay may be used to reward and focus performance over a given
period, and the long-term incentive pay, including restricted stock, stock options,
performance units and shares, and cash.
An Employee Assistance Program (EAP), a work-based intervention program, may be
utilized to resolve employee personal problems such as marital, emotional, and financial
issues. The EAP aims at helping the organisation's employees solve any personal problems
that might negatively affect their performance in the workplace (Turnea and Prodan, 2020).
An organisation's management may not coerce an employee to seek counseling. Instead,
availing of such programs can potentially bring a difference between maintaining employee
well-being, losing the employee to another competitor, or worse, employee death due to
problems in personal life.
Abstract Benefits
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Managing Human Resources
On the other hand, this refers to the intangible benefits that may be used to achieve a healthy
work-life balance for the employees. Such benefits may entail creating flexibility in the
workplace, working hours, offering paid and unpaid time off, and encouraging employees to
participate in community involvement and awareness programs (Turnea and Prodan, 2020).
These benefits have the potential to attract and retain skilled talent.
Additionally, offering comprehensive career development paths is likely to impact leadership
training, webinars, and online courses, offering internships and promotions based on
performance, tuition reimbursements, and seminars (Turnea and Prodan, 2020). Also, having
a future at a company, a future not limited to performing the same duty over a very long time,
would attract and retain high-skilled employees. Communicating the vision of the company
and its future opportunities for growth through the total rewards approach is crucial.
Total Reward Practices at Tesco PLC and Amazon
Tesco PLC
The company considers Human resources as its biggest asset. The success of Tesco's
businesses relies on every employee's contributions and performance, but the collective
performance of all the employees helps realize the organisation's objectives and mission.
Therefore, the organisation relies on a framework of goals to attain its objectives (Tesco Plc,
2018). These reward objectives include attracting the right people, motivation, recognition,
alignment, and employee retention.
The company operates within the competitive, simple, fair, and sustainable scopes of reward
principles. Tesco is competitive on financial and non-financial rewards, reflecting an
individual employee's role, performance, experience, and contribution regarding external
market practice and internal relativity (Tesco Plc, 2018). Besides, these reward systems are
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comprehensive, accurately delivered, and avoid complexities. The policies on which the
rewards are issued are transparent, consistent, and applied equally through legal compliances.
Furthermore, Tesco aligns its rewards to the organisation’s objectives, which are then given
responsibly.
Since most company employees are from different backgrounds, the reward packages of
Tesco consider various factors built around the common principles of the organisation. First,
most employees are eligible for annual bonuses consistent with the Executive Director's
yearly bonus. The Senior Managers of Tesco also participate in the Performance Share Plan
based on similar performance situations to the Executive Director’s PSP (Tesco Plc, 2018).
The management team also receives their bonuses in Tesco shares, deferred for three years.
Lastly, Tesco's values emphasize that all colleagues have equal opportunities of being the
organisation's shareholders through the all-employee schemes, holding shares in their Share
Incentive Plan, and having options over shares in the Save As You Earn Scheme.
Amazon
Besides a starting minimum salary of fifteen US dollars per hour, Amazon offers benefits
supporting families and their eligible members. These benefits are available from the first day
of employment (Amazon, 2019). They include parental leave, ways for saving for the future,
health care coverage, and resources aimed at improving the health and general well-being of
the employees.
Amazon helps its employees attain financial success through industry-leading wages and
compensations. The starting wages remain the same for all employees and contractors.
Besides the fair base pay, Amazon employees have the opportunities to own Amazon stock,
enroll in paid life and accident insurance, and participate in 401(k) plans with half chance
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