Components Of a Total Reward System

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Abstract This paper explores the components of a total reward system. We cover the historical aspect of total rewards from its earliest years to present day. We define total rewards and explain the five elements; compensation, benefits, work-life, performance and recognition and development and career opportunities. We discuss the perceived advantages and problems with the total reward scheme. Keywords: Components of total rewards, advantages and problems with total rewards 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 and rapidly rising benefits costs that prompted flexibility in programs to reduce costs (WorldatWork, 2006). 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. During the 1990s, companies
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