Why It's Essential Your Employees Understand Their Total Reward Package

Back in the 1990s, the concept of total reward emerged to challenge the traditional, one-size-fits-all approach to employee compensation.

Companies that were prioritising salary and a few basic incentives to attract and retain employees had to step up their game. The dawn of the digital age brought with it increased competition for the best candidates.

Thanks to company review sites and search engines, it’s now easier than ever for prospective employees to analyse and compare reward packages when seeking a role. Often a good, tailored reward package is the swaying vote. On top of annual pay, people are actively seeking out and comparing more of the non-cash benefits they want to see in an employee reward scheme. These are rewards which are relevant, even unique, to your business and encompass wellbeing and healthcare, volunteering opportunities, career progression, technology, or discounts. In short, the things that make people’s day-to-day easier, meaningful, and enjoyable that they won’t find anywhere else.

That said, it’s not enough to just have a reward strategy, and as many as 70% of employers struggle with helping employees both understand and value what they’re offering, leading to poor uptake and higher employee turnover. It seems, for many companies, there’s still a long way to go when it comes to effectively communicating these benefits to their people.

What happens when employees don’t understand their total reward?

In Aon’s Benefits and Trends Survey 2020, employers’ top three reasons for increasing their employees’ understanding of total reward were to:

  • Increase awareness and engagement
  • Get employees to appreciate the total value of their benefits
  • Improve employee retention rates

However, the reality for many companies is they’re losing great talent because employees don’t understand the nuances of their reward package – they simply see competitors as higher-paying. 

Globally, it’s estimated that employers lose 22.75 billion through employee turnover and absence every year because they fail to communicate their reward and benefit offerings effectively.

To work out why companies often miss the mark with communicating their employee reward, identifying common communication shortcomings is the first step. Here are some areas to start looking. 

1. Ensure employees know what their ‘total reward’ actually is

Let’s start with the term, ‘total reward’. While this phrase is nothing new, there are subtle differences between companies in the way it’s defined and communicated, from ‘total compensation’ to ‘total benefits’. Add to this a total reward statement that’s often filled with corporate jargon, and it’s no wonder so many employees struggle to understand what they’re entitled to. Don’t expect your employees to rifle through a document full of words and phrases that don’t feel relevant to them. 

Breaking down more complex elements of employee reward packages such as share plans into easy to understand language is especially important. This can be done using interactive, personalised communication – such as videos, dedicated websites, and creative toolkits.

2. Review your reward communication tactics

For new recruits, receiving a company handbook or mail-out with a rundown of their reward scheme is common. However, whether they actually read and understand it is debatable.

One in five employers still communicate their total reward package on paper, even though written communication is often cited as one of the main causes of misunderstanding in the workplace. There’s plenty of room for error and misinterpretation in written communication, and needing to follow up and seek clarification can be frustrating when new employees are already overwhelmed with information.

Getting creative, visual, and thinking strategically about your reward communication is vital for reward to do its job of fuelling company growth and engagement.

3. Remind, repeat and reinforce

Employees are reminded every payday of their salary (which makes up just one part of their reward package), while other elements tend to be mentioned once or twice and then neglected. 

Unsurprisingly, it’s not enough to just communicate these things once and assume employees will understand and remember all the details. Without consistent reminders of your incentives, you run the risk of employees forgetting what they’re entitled to.

It’s therefore just as important – if not more so – to have an ongoing reward communication strategy that goes beyond onboarding new recruits.

There are a number of ways you can remind employees of their rewards and repeat information throughout the year, including:

  • One-to-one HR meetings or drop-in sessions focused on explaining workplace benefits in more detail
  • Creating dynamic, interactive content which employees can engage with and explore, taking them on a journey through their career with you
  • Open-table meetings with employees and HR encouraging employees to ask questions about their total reward and offer suggestions and ideas
  • Promoting different aspects of reward throughout the year, such as a desktop calendar highlighting seasonally relevant benefits (e.g. gym membership in January)

These tactics can all be used in conjunction with one another, or as well as/instead of written communication to help employees really get a grasp on what’s available to them.

A strategic approach to reward communication also gives you the opportunity to analyse the effectiveness of different communication methods, as well as understand which elements of the reward package are gaining more momentum.

4. Create a ‘safe space’ for communication

Companies must always be transparent about and explain any changes made to employee reward, and how they apply to each individual. This is where creating a ‘safe space’ for two-way communication is vital, both in initial briefings and any follow-ups.

Employees will need to be given time and attention to understand the changes that have been made and why, with any written materials updated to reflect the change.

During this time, your reward communication should work to ensure employees feel comfortable asking questions and that their opinions and feelings are being heard.

5. Reward understanding is essential, but it’s only half the picture

When it comes to reward communication, taking a multi-pronged approach which includes a variety of communication methods, repeated over time, and tailored to your individual team members, is the best way to ensure your employees fully understand what they’re being offered. With this knowledge, employees can appreciate the value of and engage with their total reward package.

Taking the necessary time and effort to design an effective communication strategy surrounding your employee reward scheme always pays dividends.

Employees that understand and value their total reward package have a higher uptake on reward, making it more likely for companies to achieve the attraction, retention, and employee engagement goals they’re aiming for. People feel motivated when they know a quality reward package they understand and value is on the table, which makes reward a powerful enabler for business performance.


Looking for support with your reward communication? That’s what we’re here for.

Get in touch with us and let’s have a conversation.