Overview
The theme “Effective Total Reward System: Strategy for Talent Attraction and Retention” holds significant relevance and urgency in today’s fast-evolving and highly competitive business environment. The race to secure top talent has never been more intense. To attract and retain the best and brightest, organisations must go beyond traditional compensation models and adopt a comprehensive, holistic approach to total rewards. According to the Global Talent Trends 2025 report by MESA, over 80% of companies plan to enhance their total reward packages to better retain employees in the coming years. This statistic underscores the critical importance of total rewards in today’s workforce landscape. A strong total reward system is crucial not only for attracting talent but also for fostering a committed, engaged, and high-performing workforce
As we strive to advance human resource management practices across Nigeria and Africa, it is essential for Human Resource (HR) professionals and practitioners to fully grasp the impact of an effective reward system. Such a system drives employee motivation, nurtures loyalty, and cultivates a culture of excellence within organisations.
How organisations can shift from a narrow focus on pay to embrace the full spectrum of total rewards
When evaluating the impact of a total reward system, it is essential first to understand the full scope of total rewards. Organisations must then move beyond a narrow focus and adopt a broader approach to ensure that the talent they attract is not only hired but also retained successfully.
For organisations to embrace the full spectrum of total rewards, the following steps should be taken:
- Conduct an employee survey: A scientific and data-driven approach is necessary to capture comprehensive insights into employee needs and preferences.
- Develop a total reward strategy: This strategy must be built from the ground up, involving all stakeholders. It should not be created solely in boardrooms without input from those affected, as that often leads to implementation challenges.
- Communicate effectively: Clear and ongoing communication is crucial in any organisation that wants to successfully implement a total reward system, one that integrates both cash and non-cash rewards. Communication should not be a one-time announcement but a continuous process that includes monitoring and adjustments. The strategy must be flexible enough to evolve based on feedback and new ideas.
Ultimately, the goal is to ensure that HR practices align with business growth objectives. Whatever the nature of the business, HR must support the organisation in achieving its targets through a well-aligned total reward system.
Components of total reward that are most undervalued by employers but highly valued by talent
There are things that matter far more than money; things money simply cannot buy. Talented individuals pay close attention to these factors. To retain top talent, organisations should focus on providing the following:
- Work-life balance: Talented employees value the ability to balance their professional responsibilities with their personal lives.
- Professional development opportunities: Talents seek chances to grow and improve their skills. They want access to training and development programs that help them perform better, because doing the same thing repeatedly without growth will not lead to different results.
- Recognition and feedback: This group of employees wants to be acknowledged and receive constructive feedback. Genuine appreciation motivates them to perform at their best.
- Employee well-being: Organisations should have programmes that actively support the well-being of their employees.
These elements should be embraced even in the public sector. When employees deliver exceptional work, supervisors and managers should promptly recognise and thank them. Timely appreciation gives employees a sense of belonging and motivates them to perform even better. Recognising achievements without delay fosters growth and development within the organisation.
How non-financial rewards rival monetary compensation in retaining talent in organisations
A survey conducted by the Middle East Studies Association (MESA) revealed that employees who feel genuinely valued tend to stay with an organisation, even when faced with competitive salary offers.
Having a holistic view of total rewards, it becomes clear that compensation is just one part of the equation. Non-financial rewards such as benefits, employee recognition, development opportunities, and well-being initiatives play a crucial role in retaining talent.
With the rise of Generation Z and millennials in the workforce, the importance of non-financial rewards has grown significantly. Competitive salaries alone are no longer enough to retain top talent. Today’s workforce seeks to feel valued beyond monetary compensation.
A critical factor in retention is alignment; not only ensuring that salaries meet or exceed market standards, but also providing meaningful non-financial rewards. When employees experience autonomy, recognition, opportunities for growth, and a sense of belonging, they are more likely to stay.
Exit interviews often reveal that employees do not leave solely for better pay; many prioritise roles that support their work-life balance, family commitments, and professional development. In today’s work environment, non-financial rewards can sometimes outweigh monetary compensation in importance.
How leaders can embed a culture of everyday recognition without it feeling forced or transactional
Like any other initiative, building a strong organisational culture must start from the top with an executive buy-in. When leadership models the desired culture, it naturally flows down to every team member. It is crucial for leaders to demonstrate vulnerability by openly recognising and appreciating their team’s efforts, acknowledging how these contributions positively impact the organisation. When leaders do this authentically, team members begin to mirror that behaviour, creating a culture of openness and appreciation throughout the organisation.
However, it’s important to recognise that appreciation can sometimes be perceived as insincere. People may wonder if recognition is genuine or just a box to be ticked. To ensure authenticity, connect your appreciation to specific actions and impacts. For example, saying, “Thank you for staying late to meet the deadline” or “Your extra effort on this project made a significant difference” shows that the recognition is meaningful. Recognition should also be timely and frequent, not a rare event but a consistent practice.
Understanding individual preferences within smaller teams is also key. Some people prefer public recognition, while others value quiet, private appreciation. Some enjoy being announced in meetings, while others prefer a simple, discreet thank-you. Tailoring appreciation to how each person prefers to be recognised makes them feel truly valued.
Creating regular “reward moments” or small rituals of appreciation during meetings can help build a culture of recognition. These moments should never feel forced or overdone, as overuse can diminish their impact.
Recognition costs little or nothing, yet it leaves a lasting impression. Employees who feel valued and remembered are more likely to stay committed to the organisation. Authentic and consistent recognition is a powerful factor in retaining talent and fostering a positive workplace culture.
Role of technology and analytics in designing and managing a responsive reward Strategy
Technology and analytics play a crucial role in designing and managing an effective, responsive reward strategy. They enable data-driven decision-making by facilitating surveys that collect valuable employee feedback. The data gathered from these surveys can be analysed to provide management with insights for informed decisions. Conducting surveys helps reveal the actual usage and perception of benefits, allowing management to adjust their offerings to ensure they are relevant, appreciated, and effectively used by employees.
Beyond decision-making, technology ensures that the benefits programme is efficient and outcome-focused. Analytics tools like Tableau, Google Analytics, Visa, and BambooHR can measure the impact of employee benefits, showing how much value these programmes bring to the organisation. Through detailed analysis, companies can identify utilisation rates of specific benefits, such as medical coverage or private health insurance, and determine whether employees prefer alternatives like cash allowances.
Moreover, technology and analytics help align rewards with employee performance. By analysing survey data and performance metrics, organisations can recognise and reward high performers appropriately, rather than applying a one-size-fits-all benefit approach, which often fails to motivate employees. In the public sector, data analytics can help develop personalised reward systems that both acknowledge top performers and encourage underperformers to improve.
Ways HR teams can effectively personalise reward systems without overcomplicating the policy framework
In the public sector, everyone may be doing the same job, but some people contribute more than others. Yet, if everyone is rewarded equally, it can be very demoralising. Therefore, it’s important to differentiate and personalise the reward system. However, this should be done without overcomplicating the existing policy framework, such as the employee handbook and operational manuals.
There is a need to strike a balance where hardworking employees receive greater rewards than those who contribute less. This can be achieved by leveraging technology, conducting regular employee surveys, and using flexible benefits platforms. The reward system should allow flexibility rather than offering a flat-rate reward for everyone.
Most useful data points in determining employee preferences for reward personalisation
To understand employee preferences, it is essential to gather relevant data points. This can be achieved by conducting employee surveys to inform an approach. Additionally, collecting demographic data helps provide a comprehensive view, while performance metrics offer insight into individual contributions. Exit interviews are another valuable source of feedback, as departing employees can share their experiences and suggest areas for improvement. These interviews serve as important data points for refining policies. Predictive analytics can also be utilised to anticipate future trends and needs.
How a total reward system can be used as a competitive differentiator in employer branding
Employer branding is the image a company projects to the outside world, essentially, the perception it wants to create as an employer of choice. In today’s competitive market, visibility is crucial.
Telling authentic stories helps demonstrate how a company supports a sense of belonging and recognition. Sharing these narratives on the website and social media builds a stronger employer brand.
Organisations should also develop a “reward signature”: a unique combination of rewards associated with their brand that sets them apart. This reward structure, paired with consistent storytelling, enhances employer branding and acts as a competitive differentiator.
When potential candidates discover these unique rewards, they are more likely to engage with an organisation’s talent community, signing up for job alerts, submitting CVs, thus streamlining the organisation’s recruitment process. This reduces time-to-hire and helps build a robust talent pipeline.
Moreover, well-targeted rewards encourage employees to become genuine advocates, driving successful referral programs. Employees who feel valued and recognised naturally promote the organisation as a great place to work, attracting more quality candidates.
How organisations can align their total reward strategy with the strategic growth priorities of the organisation
Organisations should establish clearly defined, achievable, and measurable goals. Often, strategies are developed at the top level and then cascaded downward through senior management. However, given the evolving world of work, it is increasingly important to involve employees in the strategy-setting process from the outset. Allowing strategy to emerge from the bottom up helps employees connect with the organisation’s vision early on.
When goals are clear, performance targets are well-defined, measurable, and attainable, employees are more motivated to work toward them, especially when the rewards linked to achieving these targets are transparent and fair. Policies governing target achievement should be clear and communicated to everyone, ensuring that the organisation operates with integrity and delivers value.
Setting realistic goals, aligning pay with performance, and ensuring that employers fulfill their commitments and targets can help organisations to manage pay-for-performance in an inflationary economy with growing demands for salary reviews.
When goals and standards are transparent and rewards are distributed impartially, employee motivation flourishes. Conversely, unclear objectives or biased reward systems lead to demotivation. Therefore, it is essential that an organisation’s strategy, goals, and objectives are clearly defined, measurable, and supported by well-articulated reward policies. This alignment creates a win-win scenario for both employees and the organisation.
What to expect when there is a disconnect between reward programs and performance expectations, and key signs to watch for
When there is a misalignment between performance expectations and the reward system, one of the first and most significant consequences is employee disengagement. As the connection between effort and recognition weakens, employee commitment to both their roles and the organisation begins to decline. Apathy sets in, and individuals may start performing below their actual capabilities.
This is why it’s crucial for organisations to ensure that their reward systems are transparent, their strategies well defined, and their performance targets clearly communicated. Additionally, performance evaluations must be fair and consistent. When these elements are in place and effectively implemented, they foster motivation, engagement, and loyalty. However, when they are lacking, the result is often widespread disengagement and a weakening of organisational commitment.
How HR can ensure transparency in reward allocations without creating internal tension
It is essential for HR practitioners to maintain a balance in every criterion they establish for performance evaluation and rewards. Any reward or recognition for a job well done must be based on clearly defined and objective criteria. These standards should be transparent, consistent, and scientifically grounded so that they inspire trust and confidence among all employees.
Equally important is the communication of these reward policies and decisions. They should be openly shared and thoroughly explained to ensure clarity and understanding across the organisation. Transparency in the process not only fosters trust but also minimises misunderstandings and disputes.
Additionally, seeking feedback is crucial. It is through feedback that HR can assess the effectiveness of their approaches, whether they are practical, realistic, and achieving the desired results. Engaging employees in the process is vital. When employees are involved and informed, they become more aligned with organisational goals and processes.
As the popular saying goes, “Take care of your employees, and they will take care of your business.” When management is transparent and inclusive, even junior staff can attest to the fairness of decisions. If reward criteria have been openly displayed and discussed, it becomes easier for everyone to accept outcomes, reducing resistance and complaints.
Also, when reward systems are clear, inclusive, and open to scrutiny, and when employees are engaged in the process, it builds a culture of trust and accountability. This ensures that rewards for extra effort are seen as fair and justified, with little room for conflict or dissatisfaction.
KPIs or metrics that best reflect the success of a total reward system
A common challenge in total rewards discussions is the overemphasis on financial compensation, often overlooking the non-financial aspects. Modern HR must evaluate total rewards not just by Return on Investment (ROI), but also by Return on Experience (ROX), the behaviours and satisfaction driven by reward structures.
To make informed decisions, HR professionals must go beyond data collection to data analysis, identifying trends and actionable insights. Running an HR department without data-driven insights is no longer viable.
Key Metrics for Measuring ROI and ROX:
- Retention Analytics: Focus on retention patterns, especially among critical roles, high performers, and diverse talents. Leverage insights from exit and stay interviews to understand the underlying reasons for employee movement.
- Survey Insights: Analyse Employee Promoter Scores, perception, and opinion surveys to assess satisfaction with rewards and benefits. Consider development opportunities and recognition, not just pay.
- Benefit Utilisation Analysis: Don’t just implement trendy benefits; measure their effectiveness. Align benefits with employee needs and organisational goals using cost-effective and time-sensitive strategies.
Ultimately, HR should consistently evaluate whether benefits are relevant, utilised, and deliver real value, positioning HR as a strategic value driver rather than a cost center.
How compliance requirements shape or limit creativity in designing reward systems in organisations
Compliance is unavoidable. For example, Nigeria’s minimum wage law sets a baseline of ₦70,000, which should not restrict employers aiming to attract top talent. This minimum wage defines the legal boundaries within which organisations must operate. While some use compliance as a self-imposed limit, legal requirements should instead empower employers to offer competitive pay.
Compliance ensures fair, non-discriminatory compensation, no pay gaps based on gender, disability, or other biases. It sets the minimum standards that organisations must meet, but employers should recognise the value of their people and go beyond these minimum.
Compliance means following the law, avoiding discrimination, and paying taxes correctly, but it should never be used as an excuse to limit fair and innovative compensation practices.
Organisations should strive to be industry leaders, pioneering creative benefits that excite employees and encourage retention. Compliance sets the floor, but innovation in rewards should raise the ceiling, helping both employees and the organisation thrive.
Conclusion
Organisations can enhance employee attraction and retention by shifting from a narrow focus on pay to a comprehensive total rewards strategy that includes non-financial elements like work-life balance, recognition, and professional development. To achieve this, they should involve employees through surveys, personalized rewards using data and analytics, and ensure clear, continuous communication and alignment with business goals. Authentic recognition, especially from leadership, helps embed a culture of appreciation, while technology supports responsiveness and personalisation without complicating policies. Transparent, fair, and well-communicated reward systems increase trust, motivation, and loyalty. Ultimately, compliance sets the legal minimum, but forward-thinking organisations use total rewards as a strategic differentiator and a driver of growth and employer branding.
This thought leadership piece was adapted from the April 2025 edition of the ‘CIPM and YOU’ webinar and represents the opinions of the panellists during the session.
