Your total rewards strategy is integral to employee engagement, retention, and attraction. In other words, total rewards are the key to your employees’ hearts.
However, improving total rewards can feel impossible, especially when your budget is already stretched tighter than a fitted sheet over a mattress. Add on falling engagement levels and economic uncertainty, and thoughts of improving total rewards may bring nothing but stress.
But there is a silver lining: total rewards are broad, and stretching your total rewards budget doesn’t always take more money. You can improve your strategy and offer more rewarding rewards without breaking the bank. And we’re here to tell you how.
Elements of a Total Rewards Budget
Before we go any further, let’s do a quick review of the five pillars of a total rewards strategy and their impact on your budget.
1. Compensation
Compensation includes the monetary returns employees get for the work they do. This includes their salaries, bonuses, and commissions. Compensation normally takes up a large chunk of your total rewards budget, which is why it can be intimidating to think about improving.
2. Benefits
Benefits are a broad part of total rewards, but typically they’re offered to help employees enjoy physical, emotional, and familial safety and security. Benefits include health, dental, and vision insurance, retirement plans, and PTO systems.
3. Work-Life and Well-Being Programs
Work-life and well-being initiatives cover a broad range of total reward benefits. These focus on supporting employee mental, physical, and financial health. Some examples include employee assistance programs, DIEB resources, wellness programs, and flexibility policies.
4. Recognition
Recognition is part of total rewards because it conveys value and gratitude to employees. It shows employees that their contributions are noticed and appreciated. Examples include awards, promotions, birthday celebrations, and milestone recognition.
5. Professional Development
Finally, training and development is part of total rewards because it provides employees with an avenue of growth. Education and training opportunities help employees gain responsibility, learn new skills, and prepare for future job opportunities.
These five aspects of total rewards should be the focus of your budget—hopefully, you’re starting to see that even if you can’t improve compensation or benefits much, you can invest in things like work-life balance or recognition.
Common Challenges for Total Rewards Budgeting
Many different roadblocks exist that make budgeting for total rewards an adventure, but here are some of the most common:
- Staying competitive while managing costs. When your competitors are offering shiny new perks, it can put pressure on you to match that—even if you don’t have the budget for it.
- Addressing diverse expectations and needs. Some people love free food at work while others want travel reimbursement. You may struggle figuring out where to spend your total rewards budget most effectively.
- Dealing with economic uncertainty. A total rewards strategy and budget is all well and good, but how do you plan for and respond to economic uncertainty?
If you’re stuck because of these worries or challenges, don’t worry. While we can’t deny that total rewards can be complicated and expensive, here are some ways to affordably improve your offerings.
Ways to Affordably Improve Total Rewards
With the following strategies, you can boost your total rewards offerings without spending much money. These improvements can help employees feel valued, cared for, supported, and trusted, which will bring you the benefits of greater engagement and productivity.
Reallocate Your Budget
Instead of adding new money to your budget, there are ways to use your existing budget more effectively. Here are some ideas:
- Offer LSA accounts. Lifestyle Spending Accounts are an amazing benefit that minimizes wasted funds. They allow you to provide funds each month to employees’ accounts that can be used for qualified wellness purchases. And if employees don’t spend the funds, you don’t lose them.
- Find meaningful perks. Do you offer free snacks, ping pong tables, or other perks in your office? Survey your employees to figure out what is the most meaningful for them—if the perks you’re offering now aren’t reaching many of your people, use that money on perks people actually want.
- Rethink bonuses. Traditional bonuses can have a lot of downsides. By rethinking your bonus budget to reach more employees, you can maximize your funds. Things like personalized gifts, company-wide events, or extra PTO or great bonus ideas that will reward everyone.
Focus on Flexibility
94% of employees want flexibility on when they work, and 80% of them want flexibility on where they work. Flexibility is now an expectation for employees, and the best part is, it’s an inexpensive way to improve total rewards.
Flexible hours and work locations, condensed schedules, and unlimited PTO are great ideas to add more flexibility. The key is to let your employees choose how they work—this autonomy not only boosts your total rewards, but employees respond with more motivation and productivity.
Revamp Recognition
Recognition such as promotions or raises can push a tight budget to its breaking point—but employee recognition can and should encompass so much more! Here are some ideas for both affordable and free recognition:
- Celebrate employees’ birthdays and provide them with a personalized card
- Offer public shoutouts and private praise after a job well done
- Recognize both professional and personal milestones, such as work anniversaries, graduations, or having children
- Create recognition programs that reinforce your company values
- Recognize that employees have a life outside of work by providing small stipends for things like wellness or home office upgrades
Recognition increases engagement, productivity, and performance by 14% while also lowering turnover by 31%. So the ROI of this affordable total rewards improvement is notable.
Upgrade Training and Development
71% of employees say that training and development opportunities increase their job satisfaction. This shows that the majority of your people want to get better at their jobs, learn new things, and take on more responsibility.
Creating a clear path of upward mobility can be a huge addition to your total rewards strategy. Plus, inexpensive benefits such as training courses, mentoring, shadowing opportunities, and management training, will help employees see that you’re investing in their success.
These are just some ideas for improving your total rewards strategy without breaking the bank—hopefully, they sparked your own ideas for total rewards improvements.
Monitoring and Adjusting Total Rewards Budget
Even with these improvements, you’ll want to make sure your money is making the biggest impact possible. To that end, here are some best practices for monitoring your budget:
- Regular review and evaluation: Is your spending bringing an ROI? Are employees happy with the total reward offerings your company has? Is participation in your programs high? Regularly evaluate the impact of your budget and adjust when necessary.
- Adjust for inflation and market changes. The business world is ever-changing, and your total rewards need to keep up. Try to adjust your offerings to meet inflation and stay competitive as the economy changes. Your goal should be to provide the support your employees need through thick and thin.
- Address employee feedback. Everyone will have an opinion on your total reward strategy—which is a positive thing! Listen to your employees and adjust your strategy accordingly. If a majority of employees complain about one benefit, consider a shift in your budget to better fit their needs.
- Plan for the future. Things are always changing in the HR space, both positively and negatively. Keep an eye on the economy and budget safely. Also, watch out for new HR tech tools to help streamline your processes and make things easier.
Total Rewards: Strategy and Budget Harmony
You can find a good balance between your total rewards budget and your strategy. Hopefully, this post has helped you find ways to make your money do more with less. After all, compensation is only one small part of your total rewards package.
