Factors influencing the total reward system(TRS)

The Total Reward Theory draws significant inspiration from Maslow's Hierarchy of Needs. Maslow's theory adeptly illustrates the evolving nature of human needs over time, categorizing them and emphasizing their attainment. It underscores the diversity of human needs, recognizing that they can be shaped by factors such as age, demographics, gender, and available resources. This approach recognizes that employees are motivated by more than just monetary compensation and aims to provide a well-rounded set of rewards that address both intrinsic and extrinsic factors.

Maslow's theory, The Hierarchy of Needs

Let's Dive Deep into the Prymid of Need:

1. Fulfilling physiological needs encompasses essential elements such as salary, bonuses, incentives, health insurance, paid leave, and flexible work hours, forming the foundational benefits necessary for all employees.
2. Addressing safety needs involves aspects like adherence to company policies, the presence of career development plans, and the assurance of stability, ensuring a secure and enduring affiliation with the organization.
3. Meeting social needs encompasses rewards and recognitions, company culture, participation in social events, team bonding activities, and cultivating positive interpersonal relations among employees to foster a harmonious work environment.
4. Satisfying esteem needs entails aspects like career progression, exposure to challenging projects, and leadership opportunities, contributing to a sense of accomplishment and recognition.
5. Fulfilling self-actualization needs involves supporting team members in their pursuit of learning and development, obtaining certifications, exploring personal hobbies, and initiating new projects. This approach encourages individuals to follow their passions by providing feedback and resources to empower them to innovate.

Leveraging total reward benefits and how!

Companies usually allocate approximately 2-5 percent of their overall payroll for Recognition and Rewards (R&R), which are often categorized into four types: Day-to-day, Formal, Informal, and Approval-based. However, the effectiveness of total rewards can falter in two situations.

1. Scenario: 1 When employee satisfaction is negatively proportional to total reward investment. Although there is a large investment in overall compensation made by companies, there is a major problem because employees do not see the same benefit. There is a gap because employees don't feel they are getting value that matches the employer's significant investment in its staff.
2. Scenario: 2 When total reward investment is less than employees' expectations. The expenditure on total rewards is relatively low, yet employees fail to recognize their value. By pinpointing strategic avenues for investing in total rewards, employers can enhance engagement. For instance, even though the workforce comprises over 30% females, a company offers minimal maternity benefits, presenting an opportunity for improvement.

How to improve the impact of Total Reward System:

Traditional, one-size-fits-all approaches to rewards and recognition strategies prove ineffective. Let's explore the factors that should be considered while designing total reward system which helps companies to reduce cost and retain best talent.

1. Company Size: The size of a company significantly influences the formulation of Total Reward System (TRS) policies, especially in the case of smaller companies with fewer employees and lower experience levels. Such companies can adopt strategies like flexible working hours and a pay structure that emphasizes more immediate cash in hand, frequent outings, sports, innovative employee engagement initiatives, etc., which can attract and retain employees.
2. Team Segregation: Larger companies with a substantial employee base can concentrate on team-based Total Reward Systems (TRS). Implementing distinct reward systems for various teams can foster collaboration and instill a sense of belonging among team members. Employee incentive performance, peer-to-peer recognition, etc. are a few examples.
3. Age: Customizing Total Reward Systems (TRS) according to age fosters sustainability and allows room for innovation, aligning with the preferences of the evolving workforce and strengthening attraction and retention strategies. The incorporation of reward gamification plays a crucial role in tailoring these reward systems.
4. Gender: The theory of needs analysis undergoes significant variations when applied to male and female workforce segments. Benefits such as flexible work hours, remote work options, and on-site childcare facilities tend to attract a higher number of female employees.
5. Skill-Based: Certain job roles that demand a high degree of creativity in day-to-day tasks come with distinct expectations for TRS from companies.

Therefore, in conclusion, aside from the well-established approach of need theory, factors highly specific to the industry and company culture must be taken into account when designing the total reward system.