3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 1/21

Module 3: Core Elements of Non-monetary Rewards andWork Experience


Topic 1: What are Non-monetary Rewards? Topic 2: Key Elements of Work Experience

Topic 3: Governmental Compliance Issues Topic 4: Understanding Demographic and Psychographic Differences

Topic 5: Role of Non-monetary Rewards and Work Experience in Total Rewards Design Topic 6: Conclusions

Topic 1: What are Non-monetary Rewards?

A Society for Human Resource Management study (SHRM, 2005) found that bothemployers and HR professionals see benefits or non-monetary rewards as a driving factorfor job satisfaction. In this module, non-monetary rewards are defined as the set ofrewards known broadly as benefits. The array of benefits that supplement monetaryrewards are evolving quickly, as the competition for employees increases. While there is awide range of non-monetary rewards offered, most center around those that protectagainst the cost of illness or health emergencies, provide income protection in the case ofdisability, and and provide general well being for the employees and their families. Themore typical non-monetary rewards offered today are shown in the center column in table3.1 below.

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 2/21

Table 3.1 Three Elements of the Total Rewards Model




Work Experience

Base PayIncomeProtectionBenefits

Values of theOrganization

Variable PayMedicalInsurance

Community(Individual andOrganizational)

Merit andCost of LivingIncreases

Vision andDental



DisabilityTraining andDevelopment





Paid TimeOff

Sense ofAccomplishment


Day Care Employee





Companies listed on Fortune magazine's list of "100 Best Companies to Work for inAmerica" seem to recognize the importance of offering a wide assortment of benefits.They offer the assortment in order to meet the needs of the employees and address manyof the needs in Maslow's hierarchy (Maslow, 1954).The companies appear to use a totalrewards approach to compensation to attract, retain, and motivate their employees. Inaddition to what has become rather standard as a set of rewards including medical, dental

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 3/21

and vision insurance; paid time off; and ample room for career growth, some mix of thefollowing benefits is often present: education reimbursement, employee training, on-sitechild care services, financial counseling, and retirement benefits (Bates, 2003).

But it is important to remember, just as with consumer purchasing decisions, that what isvalued by one employee is not necessarily valued by all. Therefore employers mustresearch what the requisite employees in their organization desire. One way in whichinformation about preferences is gathered is through surveys or interviews, and more thanone method of gathering data about the important decisions of rewards is better.Information internal to the organization and outside the organization is recommended.Table 3.2 summarizes a report from a survey conducted by Aon (2002) demonstrating theaverage range of preferences when individuals taking the survey were asked to rank thebenefits from most preferred to least preferred, if given a choice. In this survey, the datarevealed that the benefit most often ranking the highest was medical insurance and thelowest was wellness programs. As you read the list of preferences, think about how youwould rank your own preferences. Surveys similar to the A on survey can provideinformation to organizations that can be compared against internal or other externalresearch.

Table 3.2 Employee Benefit Preferences

Benefit preference, in order of most desired

1. medical insurance

2. paid vacation and holidays

3. employer-paid pension

4. retirement savings plan

5. prescription-drug card

6. ability to choose benefits to meet needs

7. sick leave and short-term disability

8. long-term disability insurance

9. preventative/wellness coverage

(Source: Aon Survey, Benefit Preferences, 2002)

When making the decision to offer a benefit, organizations must be careful that thebenefit can be continued after it is implemented. Once offered, there can be negative

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 4/21

repercussions if it has to be taken away. Employee scan quickly grow accustomed tohaving benefits and can develop a sense of entitlement to them. In one of the offices ofHewlett-Packard, for example, employees receive free fresh fruit throughout the day, andhave now come to expect it, thereby making it difficult for the company to stop doing it.Another large company decided, as a cost-cutting measure, to eliminate the annual freeholiday turkey for its thousands of employees. The news created such wide spreadnegative reaction that the decision was quickly reversed.

There are a few benefits for which there is entitlement by law. Many employees mistakenlybelieve that their major benefits are mandatory, or required by law to be provided. In fact,however, few benefits are required by law. While the benefits listed in Table 3.3 (the majorfederally mandated benefits) are certainly more than those offered to employees prior toWorld War II, they represent only a small portion of the benefits most organizations offertoday.

Table 3.3 Federally Mandated Benefits

Workers Compensation

Social Security

Unemployment Insurance

Time Off for Family or Medical Care (FMLA)

Continuation of Medical Insurance Coverage (COBRA)

Health Insurance

Compare the list of government-mandated benefits to the list of typical optional benefitsin table 3.4 below. With this list it is easy to see how the cost of benefits can be as muchas 40 percent of the overall payroll cost.

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 5/21

Table 3.4 Typical Optional Benefits

paid time off during working hours: vacation, sick leave, personal days,bereavement, jury duty

child care facilities or services

domestic partner benefits

legal insurance

tuition assistance

flexible spending accounts

legal services and legal insurance

employee assistance programs

long-term care insurance

free or subsidized parking

free or subsidized public transportation

cafeteria plans for benefits

In addition, there are benefits that are offered that seem to be designed for specificemployees' interests and enjoyment. The list in table 3.5 provides some examples offeredby various organizations.

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 6/21

Table 3.5 Not Widespread but Increasingly Offered Non-monetary Rewards

gyms or exercise facilities

pet insurance

elder care

stock purchase plan

career coaches

subsidized cafeterias or free food and beverages

financial counseling

paid days off for volunteering

banking and post office on premises

game rooms (with electronic games, pool, table tennis)

meditation or prayer rooms

lactation rooms

concierge services

other personal services (on-site dry cleaners, car maintenance)

At Google.com, the company that was No. 1 on the list of Fortune magazine's top 100companies to work for in 2007 (Fortune, 2008), even more non-monetary rewards areoffered in addition to most of those listed in tables 3.3, 3.4, and 3.5. The benefits areoffered in an attempt to take away as many of the distractions as possible from theemployee and also to make employees turn away recruitment calls. For example, if anemployee has a baby, she receives $500 toward take-out food to help provide extra timefor the work that a new child brings. There is a laundry facility in which employees canwash their clothes for free, on-site doctors for free checkups, and a bookmobile. Tocomplement these benefits that help to eliminate any distractions, there are additionalbenefits that support the values of the organization. For example, if an employeepurchases a hybrid car, there is a $5,000 stipend toward the purchase. Knowing howmany workers love their pets, the environment is pet friendly, allowing pets in as longascertain behavioral standards are met. There are also rewards and recognition forinnovation. One employee recently received a bonus of a million dollars for her innovativecontributions. Google is not stopping with this list, however, and is considering newofferings such as sabbatical programs and rotation of positions in order to keep thelonger-term employees fresh and motivated (Fortune, 2008).

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 7/21

One aspect of the reward offerings that is a key to their effectiveness is that ofcommunication, to help employees understand the philosophy of the organization aboutits employees and the rewards offered. Another company on Fortune's 100 BestCompanies List is Wawa. The Company Spotlight of Wawa shares Wawa's philosophy andpurpose for offering the non monetary rewards it does for the employees. It is an exampleof how Wawa communicates why they offer the benefits it does.

Company Spotlight: Wawa

Benefits @ Wawa are all about YOU!

At Wawa, pay and benefits work together to help our associates meet their personalfinancial goals, protect their income against loss, and prepare themselves and theirfamilies for a comfortable future. Benefits are an important part of total compensationand Wawa places a high priority on keeping associates informed about how theseprograms benefit them and their family." (Source: http://wawa.com/joinwawa/join-benefits.asp)

One of Wawa's benefits seems to be customized for a relatively young employeepopulation, a generous tuition reimbursement program after only six consecutive monthsof full-time employment. With all the rewards reviewed thus far, it may be that one wouldthink that organizations merely "throw" benefits at employees. This is not the case. Totalrewards is not about how many different benefits an organization can offer, but ratherwhat benefits can be offered that help drive the organization's strategies. What rewardswill align with and reinforce the culture of the organization while still being financiallyfeasible?

Topic 2: Key Elements of Work Experience

In addition to non-monetary rewards, there are other important aspects of the workexperience that help to satisfy the needs, wants, and desires of employees. The plan is toget them in the organization and keep them there. A recent job satisfaction surveypublished by Monster.com revealed that while inadequate compensation is the leadingreason that employees cite for leaving a job, other top-ranking reasons include lack ofcareer advancement, insufficient recognition, and inadequate professional developmentopportunities. Good relationships with coworkers and managers, desirable working hours,and attractive benefits were the top reasons employees cited for remaining in a job.Increasingly, the one segment that allows an organization to distinguish itself from othersis this third element of the total rewards approach, the work experience. If the money is

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 8/21

available, an organization can compete with its monetary and-non monetary rewards, butit is what one has named "a signature experience" that is difficult to replicate (Erickson &Gratton, 2007). A signature experience is a program, policy, or practice unique to acompany that creates an appeal that is not found elsewhere. Some of the importantsignature experiences or dimensions of the work experience are detailed in the thirdcolumn of table 3.1.

Company Spotlight: jetBlue

"Companies that target potential employees as methodically as they do potentialcustomers can gain a sustainable market advantage. That's been the case at jetBlue.When most airlines were using standard call centers, jetBlue devised a system basedentirely out of employee's homes. This has become one of the airline's signatureexperiences and part of its organizational lore, attracting a strong and productivebase of employees who find flexible schedules more valuable than above-averagecompensation. According to CEO David Neeleman, it was more than cost savings thatprompted the company to create this signature experience. Like the flight crew, thereservations agents are the face of jetBlue, responsible for ensuring high levels ofcustomer satisfaction that will translate into increased revenues. The companycouldn't afford to pay them high salaries, so decided to appeal to a different segment,by letting them work from their homes. We train them, send them home, and they arehappy, Neeleman says. jetBlue tries to accommodate call center agents' variedscheduling requirements (some work only 20 hours a week), including sometimesswapping shifts at the last minute. Employees have unlimited shift-trading privileges,which they can negotiate using an online community board. Since introducing thework-from-home option, jetBlue reports that it has more motivated and satisfiedemployees and a 38 percent increase in customer-service levels, with a 50 percentdecrease in management workload per agent, compared with historical norms"(Erickson & Gratton, 2007, pp. 5-6).

WorldatWork (Christofferson & King, 2006) reported that the biggest changes seenrecently in the total rewards model were in the area of work experience. In the 2005study, 58 percent of the employers showed this area increased in importance. In specificimportance were recognition, development, and career opportunities. In addition tocurrent importance, the respondents stated that the category would be increasinglyimportant over the next few years. The changes also noted the interest in the values andculture of the organization, enjoying the people you work with, a sense of

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 9/21

accomplishment, feeling valued, recognition, flexible schedules, alternative workarrangements, and career opportunities.

One of the important elements of the values of the organization is that of social andenvironmental responsibility. This is due in part to the growing number of Millennials(born between 1977 and 1998) in the population. These workers have been exposed tothe growing emphasis on social responsibility in their everyday lives. Just as manystockholders look for socially responsible companies in which to invest, so is a company'ssocial responsibility important to current and potential employees. One example of anorganization that is seen as being socially responsible is Starbucks, which has an activerecycling program, giving its coffee grounds to interested local groups that use them forcompost. Also, older coffee beans that can still be used for coffee are donated tononprofit kitchens serving the needy, rather than being thrown out. Another example isMarriott International. When guest room beds and baths were upgraded, the still excellentand many unused bath towels, bed linens, and pillows were given away to nonprofitorganizations. Yet another large firm in Canada offers to give an additional 25 percent ofannual bonuses to the charity of the employee's choice. These examples help anorganization demonstrate its social responsibility.

Like for-profit organizations, nonprofit and governmental organizations also offeropportunities for individuals to work in positions in which they can fulfill their socialresponsibilities. The nonprofit segment is one that is expanding, through both volunteersand paid employees. According to the Bureau of Labor Statistics, nonprofit organizationsemployed 1.2 million workers in 2006 and rank in the top 20 fastest-growing fields(http://www.bls.gov). There were 837,027 charitable nonprofits in the United States in2003, a 68-percent increase from 1993, according to information from the NationalCouncil of Nonprofit Associations (http://www.ncna.org). These statistics show thatincreasingly nonprofits will compete with for-profit organizations for needed employees.The company spotlight below on the American Cancer Society illustrates how a nonprofitprovides fulfillment while also offering a wide assortment of competitive benefits.

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 10/21

Company Spotlight: American Cancer Society

Employee Benefits at the American Cancer Society

Save lives. Fulfill yours.

The people who choose to be a part of the American Cancer Society give ofthemselves personally and professionally. One of their ongoing rewards is seeing thecritical and tangible impact that our work has in our communities. But that is notwhere our rewards end. As all-consuming as the fight against cancer is, it doesn'teclipse the quality of life that everybody needs to thrive.

In addition to competitive pay, Society staff members enjoy employment benefits thatmake this a truly great place to work. Key among them is a commitment to a healthywork/life balance, giving staff members access to flexible work schedules,telecommuting and job sharing opportunities, and alternative work hours.

Another major benefit is the opportunity to learn and grow. This begins with aninformative orientation when you start working with the Society, and it continues withmultifaceted training and experiences that help you grow, both professionally andpersonally. For people interested in continuing with a formal education, tuitionreimbursement may also be available, depending on your location and course ofstudy.

Summary of Other Employment Benefits

1. Comprehensive medical, dental, and vision insurance

2. Life insurance for you and your family

3. Flexible spending accounts for health care and dependent care

4. Domestic partner coverage available in a variety of locations

5. Health and wellness programs

6. Employee assistance program

7. Short- and long-term disability insurance

8. Paid holidays

9. Generous vacation, sick, and personal time policies

10. Pension plan

11. 403(B) plan

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 11/21


(Source: http://www.cancer.org/docroot/emp/content/EMP_1_Benefits.asp)

The examples of programs, policies, and practices in the work experience element of totalrewards are not inclusive of all the ones that are important to employees. Other areas,such as training and development, career opportunities, and recognition fulfill several ofthe highest level of needs on Maslow's hierarchy (Maslow,1954). These are needs ofbelonging, identifying with a group, cognitive skills, positive self image, and reaching fullpotential. But just as with non-monetary rewards, the work experience is not decided inisolation of the other two. The work experience is not one that is randomly decided by anorganization, but rather strategically designed in order to attract and retain employeeswhile still supporting the organization's business objectives and culture.

Topic 3: Governmental Compliance Issues

There are entire textbooks and courses devoted to the governmental compliance issuesinfluencing benefit administration, as there are government web sites, organizationalresources, and government agencies. These resources are evidence that the thinking thatthe government recognizes that fair and equitable treatment of workers in employeebenefit plans is required of employers. This is true of both federally mandated anddiscretionary benefits. The following descriptions of some of the major benefit-relatedlaws and regulations(Bernardin,2003 and Martocchio, 2006) are presented to emphasizethat each organization needs to ensure adequate resources, including expert knowledgeof those who are consulted as decisions about total rewards are made and administered.The relevance to employee benefits or benefits administration follows each listing of theact, law, or regulation. Although the list may seem daunting, the compliance issues andthe list of laws and regulations are only a partial representation of all that exist. They arenot inclusive of all those that impact benefit administration.

Some of the major laws, regulations, and acts are:

National Labor Relations Act of 1935: requires mandatory bargaining of disability pay,employer-provided health insurance, paid time off, pension and retirement plans.

Workers Compensation Laws: requires that employers finance a variety of benefits(lost wages, medical benefits, survivor benefits, and rehabilitation services) foremployees with work-related illnesses or injuries on a no-fault basis.

Internal Revenue Code: mandates multiple regulations for legally required anddiscretionary benefits including the Federal Insurance Contributions Act (FICA), which

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 12/21

are taxes employees and employers pay to finance the Social Security Old-Age,Survivor, and Disability Insurance Program. Also, unemployment insurance benefitsare financed by federal and, sometimes, state taxes levied on employers. Federal taxis levied on employers under the Federal Unemployment Tax Act (FUTA).

Fair Labor Standards Act of 1938 (FLSA): applies to benefit practices in two ways. First,under the overtime pay provision, employees who are covered by FLSA are entitled topay at a rate of one-and- a-half times their normal hourly rate for hours worked inexcess of 40 during a workweek. Employee benefits that are linked to pay, as in thecase of unemployment insurance, increase correspondingly during those overtimehours. Second, the FLSA specifies time-off practices that qualify as hours worked. ThePortal to Portal Act of 1947 defines the term hours worked as the compensableactivities that precede and follow the primary work activities, such as non-productiontime cleanup, travel time between job locations within the scope of the regular workshift, and rest periods shorter than 20 minutes.

Equal Pay Act of 1963: is based on the principle that men and women performingequal work should receive equal pay. The definition of wages in the Equal Pay Actencompasses employee benefits. Thus, employers must provide equal employeebenefits to male and female employees who perform equal work and theirbeneficiaries regardless of cost differences.

Title VII of the Civil Rights Act of 1964: makes it unlawful practice for an employer tofail or refuse to hire or to discharge any individual, or otherwise to discriminateagainst any individual with respect to his or her compensation, including employeebenefits.

Age Discrimination in Employment Act of 1967 (ADEA): prohibits illegal discriminationin employment on the basis of age and makes specific reference to employee befefits.The ADEA sets limits on the development and implementation of employer "earlyretirement" practices that many companies use to reduce the size of their workforce.The Older Workers Benefit Protection Act (OWBPA) is an amendment to the ADEA thatplaces additional restrictions on employer benefit practices. One of severalrequirements is the equal benefit or equal cost principle, requiring employers to offerbenefits to older workers that are equal to or more than the benefits given to youngerworkers, with the exception of when the costs to do so are greater than for youngerworkers.

Pregnancy Discrimination Act of 1978: is an amendment to Title VII of the Civil RightsAct of 1964. It prohibits discrimination against pregnant women in all employmentpractices. The relevance to benefit practices is that employers must not treat

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 13/21

pregnancy less favorably than other medical conditions covered under the medicalbenefit plans. In addition, employers must treat pregnancy and childbirth the sameway they treat other causes of disability.

Consolidated Omnibus Budget Reconciliation Act (COBRA): requires employers toprovide access to health care coverage in particular instances when coverage wouldotherwise be terminated. Costs of the coverage may be completely passed on to theworker. Administrative record-keeping fees may also be charged.

Family and Medical Leave Act of 1993 (FMLA): Requires employers to continueproviding health care coverage to employees who are on FMLA leave (up to 12 weeksper year for specified family emergencies) on the same basis that it was providedbefore the leave period.

Health Insurance Portability and Accountability Act (HIPAA): is designed to lessen anemployer's ability to deny coverage for a preexisting condition and prohibitdiscrimination on the basis of any health-related status. It imposes privacy provisionsand strict compliance guidelines for health-related information.

Employee Retirement Income Security Act (ERISA): requires that employees be eligiblefor pension plans beginning at age 21 if offered by the employer. ERISA does notrequire that employers offer a pension plan, but if a company does have one ERISAcontrols the administration of it, including vesting and portability.

Uniformed Services Employment and Reemployment Rights Act of 1994(USERRA): gives individuals the right to employment by the company in which theyworked prior to military service. Employers choose whether or not to pay employeeswhile on military leave.

The Clean Air Act Amendments of 1990: requires employers in smoggy metropolitanareas such as Los Angeles to comply with state and local laws concerning commutertrip reduction. For example, this act could require employers to offer alternatives forcarpooling and provide other resources to promote reducing automobile usage.

Sarbanes-Oxley (SOX): requires specific actions for employers to take when changingstock options and/or announcing blackout periods.

Affordable Care Act of 2010: The Affordable Care Act was passed by Congress andthen signed into law by the President on March 23, 2010. On June 28, 2012 theSupreme Court rendered a final decision to uphold the health care law.

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 14/21

As is evident from the list provided, compliance issues are numerous and complex. Whenemployers are designing and implementing total rewards, steps must be taken to complywith all the relevant laws and regulations in order to not be in violation of the laws. It isrecommended that experts are included in the decision-making process and serve as akey resource to the organization when the administrative procedures are written.

Topic 4: Understanding Demographic and Psychographic Differences

The term demographics refers to the statistical makeup of a population, such as thepercentages of people who are married or single; the number who are male or female; thepercentage of ethnicity, such as Hispanic, Asian, Caucasian; and the makeup by agegroups such as percentages of Baby Boomers (born between 1946–1964) and Millennials(born 1978 or after). The United States demographics or statistical makeup of the laborforce is changing, with racial and ethnic minorities now accounting for a growingpercentage of the overall labor force, and more women in the workforce than ever before.The average age of workers is also now considerably higher than it was just 10 years ago.Knowing the demographics of a population can help an organization strategically plan(but only to a limited extent). Knowing the demographics can help determinegeneralizations about the groups that can suggest a preference for certain rewards. Forexample, along with more women in the workforce, there are also larger numbers of bothparents working outside the home. This demographic of more two-parent-workingfamilies drives many organizations to provide for more family-friendly rewards such asflex time, job sharing, child care services, or on-site facilities.

Psychographics refer to the personality traits of individuals. A demographic segment is anoverall segment of the population. A psychographic segment is a psychological trait or setof traits of a population segment. The psychographic traits of individuals include, forexample, what type of work is enjoyed, what motivates them to do a good job, whatvalues they hold, how they like to receive feedback, and what rewards are important tothem. As with demographics, different psychographics can be generalized and are helpfulto reward design to an extent. For example, one organization found that there was apsychographic segment they named "fast food junkies," employees who wanted to workonly in the fast food industry. What was important to them was learning as much as theycould about fast food, in their own store and in others. For them, a work experience inwhich they could benchmark practices of other stores, learn more about fast food trends,and have promotions within the fast food organization was important. Just asorganizations study their consumers to know what is important in their buying decisions,it is important for organizations to know what is important to their current and futureemployees. The psychographic traits of individuals are critical to know when makingdecisions about the rewards offered. One reason is there is a cost to each benefit offered,

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 15/21

and much money could be wasted on benefits that employees may not necessarily value.Another reason is that if the appropriate rewards are not offered, the organization riskshigher turnover.

It is important to know by demographic and psychographic segment what, generally, willhelp attract, retain, and motivate. This information is important in marketing used indesigning a total rewards approach, one that will attract the requisite employees with theskills needed for the organization to be successful. However, companies should notpresume to know the needs and preferences of their own employees or potentialemployees based only on generalizations, on what other organizations offer, or on whatthey learn through surveys. While this information's helpful, more research must be donewith their own employees or potential employees before decisions can be made abouttheir total rewards programs. Keeping the point in mind as to how the information mustbe further researched, some of the general information available about demographics,gender differences, and generational differences follows.


One of the things we know is that each person is unique, with their own set of personaldesires that affect what they want in are wards package. We also know that these desiresmay change depending on changing situations or life events for the person. And,increasingly so, each organization will employ multiple generations in its population ofemployees, as well as multiple ethnicities, which further affects the diversity of rewarddesires. Keeping these statements in mind, some generalizations have been reported bydemographic sector for preferences of benefits or work experience.Table3.6 shows typicalbenefits found to be preferred by employees, indicating demographic characteristics andprobable life events (Martocchio, 2006, p. 31).

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 16/21

Table 3.6 Likely Preferred Benefits by Demographic and Life Events


Demographics Preferred BenefitsUnmarried male and femaleemployee

Physical fitness programs Generous vacation allowances

Employee with dependent elderly parent or relativesElder care benefits

Flexible work schedulesMarried male and femaleemployee

Flexible work schedule

Employee with children

Day care assistance Life insurance

Health insurance with dependent coverage Education benefits for children

Older employee nearingretirement

Retirement plans with accelerated benefitsaccumulation

Health insurance coverage with prescription drugbenefits

Generous sick leave allowance Disability insurance

Retiree health care benefitsSource: Martocchio (2006, p. 31)


Gender Differences

The findings of a Monster.com survey (2008) differed based on gender and other factors.For example, the survey revealed that while men listed good pay as the main reason forremaining at a company, women rated good relationships with their coworkers andmanagers and desirable work hours as their top reasons for remaining.

Age Differences

Although there will be multiple generations in any organization, many companies aretargeting individuals born in 1978 or later (the Millennials) for recruitment and retention.This segment is important because it is80 million strong (the largest age group in theUnited States) and is just entering the workplace. Following is a listing published by

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 17/21

Versant (2008) of some of the general psychographics of the age group. From thisinformation, it is easy to see why many organizations are finding it important to publish,promote, and engage in socially responsible activities. Many organizations now offer paidtime for volunteering in an interested cause.


view their career as an opportunity to contribute to a greater good

have ideas and solutions that are often technology-oriented

have a strong sense of social responsibility and seek out employers who give back tothe community

do not define themselves by their jobs

want to do excellent work, but their lifeis not about their work

value work-life balance as very important to them

want to be connected and know how they fit into the bigger picture

are team-oriented

(Source: www.versantblogs.com/employerbranding/)

Other age segments in the workplace include the Generation Xers (born between 1965 and1976), who are 45 million in number and are reported to value ongoing training andappreciate the people and the teams they work with, but are not necessarily loyal to thecompany. If dissatisfied they will not hesitate to look for a different organization to join;they will move on quickly. Other traits of the Generation Xers include being comfortable inmulticultural settings, desire for some fun in the workplace, and a pragmatic approach togetting things done. They seem to be more satisfied with flexibility in their schedules andprefer independence in their tasks. They perform best when there are chances to compete,are offered constant feedback, and are assigned a series of long-term, meaningfulprojects (Kaye, Scheef & Thielfoldt, 2003).

In addition, there are currently 78 million Baby Boomers (born between 1946 and 1964) inthe population. They tend to focus on personal accomplishment and are motivatedthrough acknowledgment of their contributions and recognition of their value to theorganization. They appreciate the work experience dimensions that give fulfillment andhelp to express their spirituality. They are also interested in social issues and want jobsthat will allow for accommodation for family demands of children and aging parents (Kaye,Scheef & Thielfoldt, 2003).

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 18/21

The oldest major segment of the workforce is that of the Matures (born between 1925 and1945), with 75 million in the population. Because Americans are now working longer andthe age span is increasing, this segment of employees may be seen in organizations forsome time to come. The Matures tend to want choices in their work and have a desire tocontribute. They also want respect for the experience they have gained through the years.They are reported to value job titles, direction from managers, and recognition for theirdedication. A few reasons why many Matures have continued to work or are reentering thework force is for additional income, additional medical insurance, and the desire tocontribute (Versant, 2008, p. 7).

Only some of the many general differences by segment of employees have beenmentioned. Much further study of the employees within the organization and the potentialemployees the organization hopes to recruit is essential in order not only to select therewards that are valued, but also to make the best use of the dollars spent.

Topic 5: Role of Non-monetary Rewards and Work Experience in Total Rewards Design

The role of non-monetary rewards and work experience is a critical one in the overalldesign of total rewards because of the growing competition for skilled employees. TheInternational Society of Certified Employee Benefit Specialists stated, in the 14th annualtop five total rewards priorities survey conducted by Deloitte Consulting LLP (Deloitte,2008), that a shortage of skilled and talented workers has become the most pressingconcern among employers. This supplants the leading problem of recent history of risinghealth care costs (Deloitte, 2008).

It is reported that many organizations plan to redesign their total rewards to address theshortage. The majority (68 percent) plan to redesign some of their non-monetary rewardprograms to better align the interest of employees and the organization and promoteemployee engagement. Some of the most commonly identified programs to change wouldbe learning and development programs (51 percent), paid time off (44 percent), flexiblework arrangements (39 percent), and mentoring programs ( 28 percent). The respondentsreported that nearly one-third of them would be making changes to their total rewardsprograms with generational preferences in mind (Deloitte, 2008).

WorldatWork reports that the "core" parts of the traditional elements of rewards (pay,benefits, and stock awards) are no longer differentiating factors for organizations. Giventhis, it seems logical that organizations look to what they need to offer in total rewards toemploy and engage their needed employees. In order to make the needed decisions, anorganization must first know its objectives, values, and financial status as well as thespecific KSAs currently required and expected in the future. In addition, the

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 19/21

psychographics of the current and potential employees by demographic segments need tobe understood in order to design a total rewards package that is customized to attractand hold those individuals. The decisions for the total rewards design are not made byelement, but rather are considered in unison with each other as a strategic marketingapproach.

Topic 6: Conclusions

Two significantly important elements of the total rewards approach to compensationmanagement were discussed in this module. These were two elements that do not includemonetary rewards, but rather complement and supplement that element. The typicallyoffered non-monetary rewards were detailed, with examples of rewards that may besurprising to some. In addition to the non-monetary rewards, the evolving element ofwork experience was reviewed. While all three elements are essential as a holistic package,it is the work experience that can be a leading differentiating factor for employment. Alsoin this module, it was detailed how there are demographic and psychographic preferencesaffecting total rewards.

As was the case with monetary rewards, there are governmental compliance issues to beconcerned with regarding benefits and their administration. The major issues weredelineated in this module. Finally, the role of non-monetary rewards and work experiencein the broader total rewards approach and how decisions are made was emphasized. Whilemodules 2 and 3 have both touched upon how total rewards are decided, module 4 willprovide greater detail on exactly how rewards are designed and implemented.


Aon. (2002). "Benefit Preferences Survey." http://www.Aon.com

Bates, S. (March, 2003). "Benefit packages nearing 40 percent of payroll." HR Magazine.

Bernardin, H.J. (2003). Human resource management: An experiential approach. New York:McGraw-Hill.

Brown, D. (2004). "Total Rewards: Adding up the non-monetary side." Canadian HRReporter.

Christofferson, J.; and King, B. (2006). "The 'IT' factor: A new total rewards model leadsthe way." Workspan, http://www.worldatwork.org

Deloitte Consulting LLP. (2008). "Top five total rewards priorities survey."

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 20/21

Erickson, T.J.; and Gratton, L. (March, 2007). "What it means to work here." HarvardBusiness Review.

Fortune magazine. (Jan., 2008). "100 Best companies to work for in America."

Kaye, B.; Scheef, D.; and Thielfoldt, D. (2003.) Human Resources in the 21stCentury. Chapter 4: Engaging the generations. M. Effron; R. Gandassy; and M. Goldsmith.New Jersey: John Wiley & Sons.

Maslow, A. H. (1954). Motivation and personality. New York: Harper.

Mathis, R. L.; and Jackson, J. H. (2008). Human resource management. South-Western:Thompson.

Martocchio, J.J. (2006). Employee benefits: A primer for human resource professionals.McGraw-Hill Irwin.

Milkovich G.T.; and Newman, J.M. (2008). Compensation. McGraw-Hill Irwin.

Monster.com. (2008). "Job Satisfaction Survey Reveals Why Employees Move On." Retrieved4/9/08 from http://career-advise.monster.com/career-change/job-satisfaction-survey

National Council of Nonprofit Associations. "The United States Nonprofit Sector." Retrieved4/22/08 fromhttp://www.ncna.org

Society for Human Resource Management. (2004). "SHRM Benefits Survey."http://www.shrm.org

Society for Human Resource Management. (2005). "Job Satisfaction Survey."http://www.shrm.org

The American Cancer Society. (2008). "Employee Benefits at the American Cancer Society."Retrieved April 23, 2008, fromhttp://www.cancer.org/docroot/emp/content/EMP_1_Benefits.asp

U.S. Bureau of Labor Statistics. Retrieved April 22, 2008, from http://www.bls.gov

Versantworks.com. "Aligning a Multi-Generational Workforce With Your Business Goals."Retrieved April 23, 2008, from http://www.versantworks.com

Versantworks.com. "Employer Branding and Recruitment Marketing." (2008.) RetrievedApril 23, 2008, from http://www.versantblogs.com/employerbranding

3/31/22, 11:30 AM Commentary – HRMN 395 7381 The Total Rewards Approach to Compensation Management (2222)

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083776/View 21/21

WorldatWork. (2007). The WorldatWork handbook of compensation, benefits & totalrewards: A comprehensive guide for HR professionals. New Jersey: John Wiley and Sons.

Return to top of page

Is this the question you were looking for? Place your Order Here