Total Rewards Strategy: The Best Foundation of Pay for Performance

Abstract

Successful pay-for-performance design and implementation begins with solid total reward strategy. This gives the company a structured platform from which future program decisions can be made consistently across the company, even as the environments change. It can also contribute to ensuring that human resource programs are aligned with the overall business strategy and the company’s direction. This article defines a total reward strategy to include base salary, variable pay including short-term and long-term incentives, other direct compensation, perquisites, benefits and performance management. Designing and implementing a total reward strategy is straightforward. An appropriate planning and a holistic approach are required to effectively link performance to these rewards.