Total Rewards
What the domain tests
Total Rewards tests pay strategy, internal equity, external competitiveness, benefits, incentives, and international pay administration. PHRi expects you to apply reward concepts within local law and market practice.
Core rules
- Total rewards include base pay, variable pay, benefits, recognition, and development. Strategy must fit business goals, labor market, and affordability.
- Internal equity is built through job evaluation: ranking, classification, or point-factor. External competitiveness comes from salary surveys; use medians and age the data.
- Pay structures use grades and ranges. Compa-ratio = base salary / midpoint. A 0.90 compa-ratio is below midpoint; 1.10 is above.
- Incentives must have clear measures, funding, and governance. Sales plans, bonuses, and long-term incentives carry different risk.
- International pay: balance-sheet approach protects expatriate purchasing power; host-based and globalist approaches differ in localization. Check local minimum wage, overtime, social insurance, and pay equity rules.
Worked example
An employee earns 54,000; the grade midpoint is 60,000. Compa-ratio = 54,000/60,000 = 0.90. HR also finds the range minimum is 48,000 and maximum 72,000, so the salary is inside range but below midpoint. Before offering a market adjustment, HR checks survey median for the local market and internal peers. The reasoning separates internal position from external market data.
Traps
Confusing median with average; ignoring pay compression; applying home-country expatriate rules blindly; forgetting mandatory benefits; using salary surveys without ageing or matching jobs properly.