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Six Reward Principles

Four Total Reward Components

Improving Variable Pay or Incentives


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Four Total Reward Components

Companies must provide the workforce with an effective value proposition that involves the four total reward components outlined below. Companies can either balance the four components or emphasize one over the others, but they must provide a total reward package that attracts the type of talent they need and want. For example, some companies may be weak in positive workplace but have very strong total pay to make up for the difficult work environment. Other companies may have weaker total pay but develop people, provide a positive workplace, and have a compelling future that people want to support and be a part of.

Use this worksheet to identify your company’s strengths, neutrals, and weaknesses on each element in the four total reward components. How does you company size up? Does each component have a strength? Is there a balance among components? Are there enough strengths to make up for the weaknesses? What are the areas for improvement over the shorter term and longer term? Pay People Right! provides a roadmap to help you take positive action based on your evaluation of your company.

Total Reward Component Element Current Strength (+), Neutral (=), or Weakness (-)

Individual Growth

  • Investment in people

  • Development and training

  • Performance management

  • Career enhancement


Compelling Future

  • Vision and values

  • Company growth and success

  • Company image and reputation

  • Stakeholdership

  • Win-win over time


Positive Workplace

  • People focus

  • Leadership

  • Colleagues

  • Work itself

  • Involvement

  • Trust and commitment

  • Open communications


Total Pay

  • Base pay

  • Variable pay (cash and stock)

  • Benefits or indirect pay

  • Recognition and celebration


Source: Zingheim, Patricia K., and Jay R. Schuster. Pay People Right! Breakthrough Reward Strategies to Create Great Companies. San Francisco: Jossey-Bass Publishers, 2000.


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