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What is total rewards?

Total Rewards: All of the tools available to the employer that may be used to attract,
motivate and retain employees. Total rewards include everything the employee perceives to
be of value resulting from the employment relationship.

Throughout history, employers have been challenged with attracting, motivating and
retaining employees. From the simplest barter systems of centuries past to the current
complex incentive formulas of today, the organizational premise has been the same: Provide
productivity and results to our enterprise and we will provide you with something of value.

Learn More
The 'It' Factor: A New
Total Rewards Model
Leads the Way
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Historical Snapshot

In the earliest years that the fields of compensation and benefits were recognized as
professions, practice was based largely on formulas that served the entire employee
population in an organization. Salary structures were just that -- rigid and highly controlled --
and benefits programs were designed as a one-size-fits-all answer to a homogenous work
force.

In the 1970s and 1980s, organizations recognized that strategically designed compensation
and benefits programs could give them the edge in a rapidly changing environment.
Organizations were responding to:

• Global economic development and the emergence of multinational firms

• A much more competitive business environment
• Diversification of the work force to include workers who didn't fit the sole
breadwinner, head-of-household model of the '50s and '60s
• New government mandates related to employee benefits
• Rapidly rising benefits costs that prompted flexibility in programs to reduce costs.

Suddenly, the relatively simple compensation and benefits programs of the past were
requiring consideration of their strategic impact and relationship to one another. Integration
became a key, and compensation and benefits professionals emerged as critical strategic
partners in their organizations' leadership -- a position still occupied by leaders in the field
today.

Companies have experienced unprecedented challenges including:

• Dramatic changes in the workplace, including increased awareness of conflicts

caused by family, home and work demands.
• Workforce demographic changes that challenged the traditional working-father, stay-
at-home-mother model of previous decades.
• Fewer resources available for pay increases.
• Substantial increases in health-care costs in some countries.
• Rapid decline of defined-benefit pension plans as a financially viable retirement
model.
• Tremendous advances in technology and the emergence of new business
opportunities.
• Geographic movement of many manufacturing and service roles.
• Advancement of pay-for-performance practices.
• Unprecedented mergers, acquisitions and global competition.

Collectively, these forces and others caused business leaders to scramble for ways to
improve efficiency, effectiveness and marketplace viability. HR professionals -- particularly
those specializing in compensation and benefits -- were challenged to contain costs and
contribute to improved business results. These professionals were at the forefront of
designing and implementing programmatic changes that have shaped the next generation of