By Susan Malanowski and John Malanowski

A total rewards philosophy forms the foundation for leadership decisions regarding employee compensation and benefit programs. A good Total Rewards Philosophy will also provide the framework for communicating the programs to employees. Having an up to date or “refreshed” Total Rewards Philosophy can be especially helpful during times of change in the business, work environment and external market conditions, such as Covid-19.

A simple search on the internet will bring up a variety of Total Rewards Philosophy statements that organizations have embraced to inform investors about how executive programs are developed and how to communicate pay and benefit programs to all stakeholders. (When it is limited to compensation programs, it is referred to as a Compensation Philosophy or Compensation Strategy.)

Below we have documented the four steps needed to help you develop a Total Rewards Philosophy that works for your organization. We have also included several examples under each Step that represent key considerations many companies have incorporated into their Total Rewards Philosophy.

Step 1 – Indicate Total Rewards Alignment with Strategy, Values or Culture


  • Our total rewards programs reflect a focus on business results and individual performance, contributions and accountability.
  • Our programs support our commitment to open communication, growth in competencies, accountability to customers, programs and employees, ethical behavior and the safety, dignity and development of our employees.
  • We provide a fair and competitive compensation program that attracts, retains and rewards high-performing employees at all levels.

Step 2 – Provide a High-level Overview of the Elements of Total Rewards


  • Compensation is more than just pay. It includes benefits, paid time off and a variety of other perks.
  • Total cash compensation is comprised of base salary, variable compensation and recognition.
  • Employees share in the company success through our variable compensation program.
  • Employees who demonstrate accountability in their work, commitment to customers and innovation in achieving results receive timely and personal recognition.
  • We provide a competitive benefit program designed to support you and your family across all dimensions of health, retirement, income protection and paid time off.
  • We support the development and growth of our employees through career pathways in our major job functions.

Step 3 – Describe Your Desired Relationship to the Competitive Market, Internal Equity and Performance


  • We are committed to providing a total compensation package tied to the attainment of individual and group results and the achievement of organizational goals.
  • Individual results are primarily reflected in base salary and with bonuses making up a small portion of total cash compensation.
  • We provide the opportunity for employees to achieve resulting salaries that are competitive with the 50thpercentile of our specific labor market in biotechnology and our many local labor markets.
  • We invest in rewarding high performance and provide employees with the opportunity to earn base salaries in excess of market.
  • Our pay guidelines and manager training ensure that similar jobs are paid equitably across the organization.
  • The range and level of benefits-offered and employee costs/contributions are targeted to be highly competitive in the biotechnology industry.
  • Employee benefit costs are based on level of salary so that those with higher salaries pay a higher contribution rate than those with lower salaries.

Step 4 – Indicate What Information is Available to Employees


  • Managers and employees have access to job-related content, pay guidelines and salary ranges.
  • We clearly and consistently communicate our approach to compensation and benefits throughout the year, cascading such communications broadly to employees and through the statements and actions of leadership.

In summary, your total rewards philosophy is a series of statements that define the components, competitive positioning, labor market and the objectives/requirements for all of the organization’s reward programs. We would be pleased to help you develop or “refresh” your Total Rewards or Compensation Philosophy to ensure that your organization is taking a wholistic approach to compensation and benefits program design.