Compiled by Tamara Rebeira


Chandrasiri Hewapattini explains how total rewards benefit all concerned

Q: How do total rewards align with organisational values and strategic goals?

A: Total rewards are driven by business needs and aimed at creating a high-performance culture, and increasing employee engagement, retention and empowerment. They cover all the tangible and intangible aspects of work that are valued by people, and not limited to pay and benefits.

Employees should be able to see a strong link between business objectives – i.e. what is expected of them and the reward mechanism attached to it. To attract, retain and motivate top talent, total rewards should integrate elements such as compensation and benefits, recognition, career development, and an enabling work environment and culture.

Q: Why is equitable pay critical for organisational success?

A: Equitable pay refers to the internal consistency of pay and benefits among employees. If a reward is perceived as being inequitable and unfair, it creates a threat response that undermines employee motivation, engagement and productivity.

Internally equitable salary structures help ensure that employees receive proportionally fair treatment in terms of pay, anchored on clearly defined expectations as regularly communicated by the employer.

Equitable pay arrangements leave little room for biases or discrimination.

Q: And why should businesses consider variable pay in addition to base pay?

A: Base pay is like the foundation of a house – it must be strong enough to build the structure. This gives you a solid foundation to build your total rewards structure.

One may rightly argue that base pay is simply an exchange of money for labour and has limited motivational value.

Variable pay or ‘pay at risk’ is a form of supplementary compensation granted based on employees’ performance goals. If administered through a robust performance management system, this is a powerful tool that enhances staff engagement.

Moreover, variable pay in addition to monetary benefits may provide several intrinsic rewards such as providing employees with a sense of achievement and recognition for their contributions.

However, variable pay must be closely monitored to avoid undue risk taking.

Q: How should companies ensure that total rewards programmes remain competitive within their sectors or industries?

A: First, take stock of what you have and use it as a starting point for improvements.

Exit interviews provide insights into how competitive your reward programmes are. Identify the organisations you lose employees to and those that attract your top talent. Benchmark your reward practices against theirs.

It’s also important to regularly participate in industry-wide compensation and benefits surveys. Determine where you want to position yourself in the market. Many organisations position themselves at the market median in total compensation while better performing corporates may target the upper market quartile.

Transparency and communication are also crucial to ensuring that employees understand the value of a total rewards strategy and appreciate the benefits available to them.

Q: Why is measuring the ROI of total rewards programmes important?

A: If your total rewards programme is effective and has increased employee engagement, this should be reflected in critical business outcomes such as higher profitability, productivity, industrial harmony and customer satisfaction.

You should also observe a reduction in product defects, workplace accidents, staff turnover and absenteeism. This has been established through Gallup surveys.

Q: Can aspects like diversity, equity and inclusion (DEI) be considered when designing and administering such programmes?

A: In an effort to recruit and retain the best talent, organisations are increasingly developing employee engagement programmes centred on DEI.

A firm commitment to this can enhance employer brands while sending a strong message to employees that they’re assessed based on performance. Today’s job applicants consider DEI as a deciding factor in their choice of employment.

Q: Is career development a critical component in total rewards?

A: Yes, it’s one of the biggest drivers of engagement among millennials. It offers employees a clear road map for development and progression.

Q: How should organisations incorporate employee views on the design of total rewards programmes?

A: When crafting total rewards, employees must be treated as customers rather than mere consumers. We need to recognise that each employee is unique with varying preferences and priorities.

Employee engagement surveys are powerful tools for obtaining feedback. Based on this input, companies can constantly revisit their total rewards, exercising a high degree of flexibility in terms of work arrangements and people practices.

Take for example the case of an employee covered by a comprehensive family health insurance plan through his or her spouse – it makes little sense to offer the same benefit. Instead, the employee may appreciate a holiday plan of equal value. This level of personalisation, where possible, greatly enhances satisfaction and engagement.

The interviewee is a human resources consultant.