What is a total rewards strategy?

A total rewards strategy refers to a comprehensive plan that includes all forms of compensation, benefits, and non-monetary rewards provided to employees. This approach recognizes that employees are motivated by various factors beyond just salary. It encompasses financial compensation such as base salary and bonuses, employee benefits like health insurance and retirement plans, and non-monetary rewards, which can include recognition programs, professional development opportunities, work-life balance initiatives, and a positive workplace culture.

By using a total rewards strategy, organizations aim to create a holistic approach to employee engagement and retention, as well as to enhance overall job satisfaction. This strategy acknowledges that employees value a range of rewards and incentives that contribute to their professional and personal lives, and it helps attract and retain top talent by offering a balanced rewards package tailored to diverse needs and preferences in the workforce.

In contrast, the other options focus on narrow aspects of employee compensation and do not encompass the breadth of what a total rewards strategy entails. The emphasis on health benefits, incentives for sales employees only, or strategies aimed solely at reducing payroll expenses does not align with the comprehensive nature of a total rewards approach.