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Developing a Total Reward Philosophy

A Total Reward Philosophy is a statement of the over-arching principles guiding the Total Reward Strategy. It could be considered as a 'values check', e.g. if an employee or HR colleague asks if the organisation can introduce or change a policy, the Total Reward Philosophy can guide you to an appropriate response. However, it is intended to guide, not prescribe, and should focus on brevity and meaningfulness (there is plenty of room in policy documents for rules and explanations).

An example of a Total Remuneration Philosophy might be:

'We seek to offer an attractive Total Reward package that is flexible enough to be customised to the needs of the individual employee, whatever their personal circumstances. We want to engage our employees to such a degree that they willingly choose to work for us rather than another organisation that can afford to offer better tangible rewards.'

Your organisation's view on the following questions might provide useful insight into your values and principles, and assist you in articulating your Total Reward Philosophy:

1. What do we want to reward people for?

Most public service organisations pay primarily for the job (as measured by some form of job evaluation scheme), perhaps with some additional reward for time served or experience. Private sector organisation typically combine paying for the job with paying for individual, team or organisational results (performance-based pay), by paying for capability (perhaps through skills-based or competency-bsed pay), or through a combination of the three.

2. In what form should we reward?

In the past, organisations have competed mainly on cash or benefits. The weakness of this approach is that these aspects of reward can be easily replicated - someone can simply offer more money or better benefits. Transformational rewards - those outlined in the Engaged Performance® Framework - are harder to replicate, so can form a better 'glue' between employee and employer.

3. How much should we reward?

Do you pay at the top of the market, the bottom, the middle, or somewhere in between? Your freedom in this area will be constrained by many external factors, including employee expectations/attitudes, trade unions, other external stakeholders, the legislative environment (taxation, minimum wage, flexible working), and organisational and national culture.

The more detailed responses to these questions will help form the basis for your Reward Strategy.