Non-financial reward

‘Total reward’: a medium through which employers

may frame extrinsic and intrinsic reward as a
balanced portfolio
The evolution of contexts for reward and ideas
regarding ‘employee engagement’ (active, not
passive, reward)
The notion of a ‘compelling employment proposition’ –
which is easier to state than to deliver
Reflects strategic thinking:
a) a clear focus for reward resource investment
b) comparison with competitors’ offer in the ‘war for
talent’
THEORY:

• holistic view of employees – as persons, not

‘resources’
• reflecting the ‘hierarchy of needs’ – and/or a
sophisticated consumer culture in which ‘talent’
segments expect to mix a ‘reward bundle’ tailored to
their personal situation
• ‘talent market segmentation’ analysis to optimise
investment in different groups with changing traits
• social exchange theory predicts that employers who
demonstrate a personalised commitment to their
employees will be rewarded in return with ‘affirmative
commitment’ and ‘discretionary effort’ – ie beyond a
‘continuance’ relationship (simply ‘turning up’) at
work
Beyond pay and benefits: a leading-edge employer view on factors
surrounding a ‘strategic’ approach to reward management:
‘We were missing out on a significant part of our “employment deal”
– partly in terms of the investment, partly in terms of people not
being able to calculate the true worth of their package, and partly
because there was a range of elements that people might really
value but that weren’t really “communicated”. We realised the
importance of process, reflecting the dynamism involved: while we
might talk about pay and benefits, as though these were static, the
real difference was being made through flexibility in how they were
applied. As a result, we formed a deliberate plan to talk to our
existing people, and to prospective employees, in much broader
terms about the total package.’
Tim Fevyer, Senior Manager, Reward, Lloyds TSB

DISCUSSION:
What practical actions does this analysis suggest to you?
Total reward factors which combine to comprise
the work experience:
• acknowledgment – from informal ‘thank you’ to
formalised recognition schemes: a form of
competence development feedback
• balance (of work and life) – addressing work–life
conflict
• career or professional development – work
management to fulfil the employee’s desire for
personal growth and belonging
• workplace environment and culture – style of
management and opportunities for employees to
participate in managerial decision-taking
 Total reward – an overview

With acknowledgements to Helen Murlis and Clive Wright

 The business case for the
‘total reward’ approach

BUT: Sophisticated efforts to achieve employee engagement imply

corporate leadership with the capabilities and willingness to act in
‘emotionally intelligent’ ways. Critics warn of tactics that may be
perceived as attempting a form of ‘voluntary coercion’.
 Summary
• Shift of emphasis from pay as the compensation, with fixed
benefits, a low-cost supplement, to a synthesis of ‘total reward’
as a potential behavioural driver.
• Flexible benefits may go some way to addressing workforce
diversity. But the logic of total reward is promoted by
commentators as scaffolding for a distinctive ‘employment
proposition’.
• The interpreted value of and messages in that proposition may
vary by recipient.
• Grounded in the theoretical assumption that employees are not
solely economic agents – they look for meaning in and control
over work and a balance with their ‘other’ life.
• Ethical and moral dimensions of ideological initiatives intended
to secure voluntary identification between individual employees
and the organisation need to be understood and acted on in
framing and applying policy choices.
CIPD Employee engagement factsheet accessible from this web link:
http://www.cipd.co.uk/subjects/empreltns/general/empengmt.htm.