Total Reward Statements (TRS) do exactly what they say on the tin: they are a way of communicating to employees the overall value of the entire package from their employer – a breakdown of their basic pay, variable awards and benefits. The constituent parts are all given a monetary value, to show the employee the cash value of their package, reinforcing the larger figure, away from basic pay.

What is total reward?

Total reward is about demonstrating what you provide an employee by way of reward for doing their job. It can include anything that you pay for or provide, which wouldn’t be considered a business expense, from free fruit to flu jabs or long-service awards.

This is a valuable tool for companies that have a strong package to promote – if you offer good pay and incentive schemes, generous pensions and healthcare, or great share awards, promoting the value of these rewards can expand employees’ appreciation beyond just basic pay to incorporate the whole value of their package.

Total reward statements which show a breakdown of the different elements of an employees package can be communicated either online, via dedicated software, or offline - on paper.

Why offer total reward?

Most companies cite improved employee engagement as the main business benefit of using total reward statements, which we define as actively promoting their employer as a good place to work or feeling that they receive a ‘fair deal’.

A secondary advantage is improved recruitment and retention of employees, which makes sense on the basis that companies competing for a small or highly competitive talent pool may use total reward to demonstrate the competitiveness of their offer in comparison to their peers who may only demonstrate the value of basic pay.

How to implement total reward statements

The first consideration is whether to implement total reward statements as part of another initiative such as flexible benefits, or to implement them as a standalone exercise. This will help determine messaging and design of the statement.

1) Statement design


The total reward statement needs to strike a balance between accuracy and ease of production/maintenance. Ideally, all cash payments the employee receives would be included (to replicate their taxable earnings), while the inclusion of benefits can be determined based upon:

  • Their relative value – would you include something worth a few pounds for an employee earning £100k?
  • Their prevalence – if only a few employees receive the reward, would you go to the lengths of calculating its value and maintaining it?
  • The frequency with which the information changes – if the value could get out of date very quickly, how meaningful is it to provide to employees?
  • The ease of access to the information – if the information is not held centrally, but with third parties and is difficult to value or calculate, is it worth the effort? 

The key to getting the right elements on the statement is to balance the above considerations.

Once you have the list of items, the next consideration is how to value them:

  • For cash, this is relatively straightforward, as you can use what you paid them. The only consideration is the time-period over which you show the values – do you use what has been paid in the last period or what could be earned over the next period?
  • For benefits, it can be more complicated, but generally, companies use the cost they paid for the benefit to show its value – for example, insurance premiums or pension contributions. The only issue with this may be getting exactly the right value for employees. If complex to determine – you may consider using an average or estimated value to make sure a benefit can be included.

2) Communication


When you consider the above comments regarding valuation of benefits, it is easy to see why total reward statements are typically launched together with initiatives like flexible benefits, where companies have to get the costs correct to ensure employees are correctly charged for cover.

Apart from that, the biggest considerations for communication are:

  • Use of media – do you use online or paper-based communications or both? As with most decisions, this comes down to the business case for one versus the other. Online systems are usually more expensive than paper solutions, but provide better return on investment, because of continuous access, ease of updating/providing real time information and reduced risk of errors.
  • Positioning of TRS – timing and messaging are vital to perceived value amongst employees. Producing TRS on an annual basis around pay and bonus reviews can be a great way to reinforce messages around visions, values and performance. It can, however, disengage people that don’t feel they are getting a ‘fair deal’ or aren’t performing as you would like.

3) Administration


This naturally goes hand-in-hand with communication and whether you are using on or offline media. Where systems are involved, you want to make sure they communicate in the right way, to avoid manual manipulation of data. The more frequently you want to update and communicate TRS, the more you need to consider automation of data transfer – something that is a given for flex.


*ER360 Research