Chapter 11 – Strategic Pay Plans
THE STRATEGIC IMPORTANCE OF TOTALEMPLOYMENT REWARDS
Total employment rewards: integrated package of all rewards (monetary and non-monetary, extrinsic and intrinsic) gained by employees arising from their employment.
Encompass everything that employees value in the employment relationship.
There are a variety of models to define the elements of total employee rewards. See below:
WorldatWork conceptualized the total rewards model within 3 categories:
1) Compensation (extrinsic)  monetary
2) benefits (extrinsic)
3) non-monetary rewards(intrinsic)
Work experience category is FURTHER split into 3 parts resulting in five categories of total rewards
1) work-life programs
2) performance and recognition
3) development and career opportunities
The total rewards approach (vs. approach of managing different elements of compensation in isolation) came from the changing business environment. The economies of developed countries became more virtual, knowledge-based, and service-based  employees =drivers of productivity.
This approach considers individual reward components as part of an integrated whole to determine the best mix of rewards that are aligned with business strategy and that provide employee value, all within the cost constraints.
Alignment: extent to which rewards support outcomes that achieve org’s strategic objectives.
Employee value: rewards are meaningful to employees and influence their affiliation with org

The Five Components of Total Rewards
1. Compensation: direct financial payments; wages, salaries, incentives, commissions, and bonuses.
2. Benefits: indirect payments; financial(employer-paid insurance and vacations) & employee services
3. Work-life programs: programs that help employees do their jobs effectively, such as flexible scheduling, telecommuting, childcare, and so on.
4. Performance and recognition: pay-for-performance and recognition programs
5. Development and career opportunities: planning for the advancement or change in responsibilities to best suit individual skills, talents, and desires.  tuition assistance, professional development, sabbaticals, coaching and mentoring opportunities, succession planning, and apprenticeships

Rewards Program Effectiveness at the World’s Most Admired Companies
2009: world's most admired companies (MACs) excelled in 6 areas of reward program effectiveness:
1. focusing on excellence in the execution of rewards programs
2. rewards programs are aligned with org goals, strategy, and culture  global, centralized approach to managing rewards strategy, compensation structures, and performance mgmt. programs
3. promoting a total rewards view across the org and leveraging intangible rewards  understand that workers are motivated by more than just money, but also career growth, recognition, etc.
4. having stronger programs for developing talent from within, resulting in lower base salaries (by 5%)
5. better leveraging their managers’ skills in rewards program implementation
6. reinforcing HR’s role in helping managers succeed at putting reward programs into action
They also excel at communicating their business strategies to managers and employees
MACs like intangible rewards  means stronger pool of homegrown talent to choose from when job vacancies arise less reliant on hiring expensive external talent  lower base pay!
Orgs fret about the design of their rewards programs, but it is the way that the programs are put into action and then sustained by the organization that drives effectiveness.

Impact of Rewards
The purposes of rewards are to attract, retain, motivate, and engage employees.
Engagement: positive emotional connection to the employer and a clear understanding of the strategic significance of the job  results in discretionary effort on the part of the employee. for Canadians, competitive base pay= #1 factor in attracting employees having excellent career opportunities = most important factor in retaining employees