What does the term "total rewards system" refer to in HRM?

The term "total rewards system" encompasses a comprehensive framework for managing various aspects of employee compensation and benefits. This system goes beyond just salary to include a holistic approach that addresses both monetary and non-monetary rewards. It typically integrates base pay, bonuses, benefits packages (such as health insurance and retirement plans), recognition programs, and opportunities for professional development.

By adopting this comprehensive approach, organizations aim to attract, motivate, and retain employees effectively. A well-structured total rewards system can enhance employee satisfaction, align individual goals with organizational objectives, and ultimately drive performance. This broad perspective acknowledges the diverse needs of employees and ensures that the rewards provided are meaningful to them.

This understanding highlights the significance of a total rewards system in effectively managing compensation and benefits within the larger strategy of human resource management.