5 Hidden Cost of Inaccurate Compensation

Are You Sabotaging Your Total Rewards Program?

Erin Cushing
Sep 14, 2016

total rewards

If you’re a compensation professional who manages a total rewards program at your organization, then you might be in for a shock: not all employees get that excited about the program. In fact, depending on the level of your program’s complexity and how effective your team is about communicating your rewards strategy and program, you might actually have sabotaged the effectiveness of your total rewards program.

How? It’s easy: you might be communicating your rewards strategy in the wrong way to your employees. In fact, many organizations only talk about total rewards in terms of the programs they offer, and not through the lens of strategy and benefits. This type of approach to compensation communication doesn’t support your employees at all. Here’s the breakdown:

What Employees Hear When You Just Talk about Rewards Programs:

“Here’s a list of the ways you can get paid and rewarded for your work.”

That’s it. There’s no real discussion about the pros or cons of the programs, nor is there a real understanding of the most basic question an employee has about total rewards: “What’s in it for me?”

What Your Employee Should Hear When You Discuss Holistic Total Rewards:

“Here is exactly what you get out of this program because of the way it’s structured. The company is investing in you in these ways.”

This approach focuses on how the organization plans to meet employees’ expectations surrounding compensation; this level of understanding helps alleiviate confusion around compensation structures, which can lead to employee disengagement and attrition.

Another important component that tends to get left out of total rewards communication are the non-monetary aspects; for example, while one program might not carry a significant performance-based raise, it might offer exclusive career growth opportunities for participants through mentorship or other opportunities not available to less successful employees. Making sure to communicate those aspects helps deliver the message that while the actual dollar amount might not make the employee happy, there are significant ways that the company is investing in them based upon their performance and output. That non-monetary demonstration of value can help engage and retain high performers, but if they don’t understand the trade-offs their plan offers, they might only see what they made on their last bonus and decide to jump ship because they don’t think they are valued by their current organization.

Unfortunately, there is no one formula to successfully build a total reward communication strategy; it must be tailored to fit your organization’s total rewards program. However, there are two necessities every program will need:

  1. The ability to communicate in simplest terms Total rewards programs are extremely complex, especially in enterprise or large, multi-faceted organizations. Compensation professionals need to be able to break down the particulars of their strategies and programs to effectively communicate across the entire workforce what each employee gains from their program(s) and how the company is investing in them, and why.
  2. Secure data management Compensation professionals need the right technology partner that helps them simplify total reward program execution as well as communication, without sacrificing the security of sensitive employee and organizational data needed to manage compensation programs. Security shouldn’t be sacrificed to simplicity.

The right technology solution can deliver simplicity, security, and effective communication opportunities to support even the most complex of total rewards practices. Learn why PeopleFluent is an industry-leader in compensation management; see our award-winning solution in action. Register for our interactive product demo here.


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