There has been much written about Total Rewards as a means to show employees that companies invest more in them than just what they see in their paychecks. At many organizations, employees receive a number of different types of rewards such as health, dental, and life insurance, 401K matches, stock awards and other incentives, etc. And, I agree that it’s more impactful to present each employee with a piece of paper that lists all of these rewards and neatly depicts the total value to show how much the company appreciates them.

However, delivering such a statement is only the scratching the surface of a Total Rewards approach to engagement and retention.

Total Rewards is not just the ability to sum up compensation and benefits, it’s making sure that every dollar spent is being used effectively to get the maximum result for both the employee and the company.

The desired result for an employee may be to increase the final amount on the Total Rewards statement, or to optimize the balance of reward types according to personal preference or needs. Either of these outcomes is dependent on providing employees with the right information, tools, and visibility to understand how their actions affect their Total Rewards. For example, through achieving their goals to get better merit increases or bonuses, or making smart benefits choices that gets them the best benefits for the least money.

A Total Rewards statement, without empowering employees to affect their type and distribution, may be seen as simply a summation that employees feel they have little or no control over. As part of a Total Rewards strategy, that statement can become another communications vehicle between the company, the manager and the employee about their respective progress in optimizing the amount and balance of rewards to maximize engagement and performance.

The goal for a company that has an effective Total Rewards strategy should be to get the maximum value out of every rewards dollar. I would define that maximum value as making the company as successful as possible with each dollar. Each dollar should be used to retain key employees, encourage them to work more effectively, and align what they are doing with the company’s mission and goals. I’ll suggest four ways to start doing that:

Align compensation with goal achievement
Differentiate rewards for disengaged, moderately engaged, and top performing employees
Give managers tools to drive communications, alignment and better decisions in rewards
Give employees the tools and information they need to make decisions on rewards that they select, such as healthcare elections
It’s my experience that taking these steps starts the transformation from offering a Total Rewards statement –a piece of paper that an employee glances through and puts into a desk drawer – into executing on a Total Rewards strategy: leveraging the investments you make in your people to help drive top-line results and your company more successful.