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The Role of Total Rewards in Employee Retention

 



Keeping good employees is one of the biggest challenges for organisations today. Many people leave their workplaces because they feel underpaid, unrecognised, or unable to grow. Because of this, companies now focus on total rewards. This means looking at pay, benefits, recognition, and non-financial rewards as one combined system. When these parts work well together, employees are more likely to stay. This article explains how each part helps retention with examples from Sri Lankan companies.

Pay: The Basic Building Block

Pay is the first thing employees think about. If people feel they are paid unfairly, they often look for another job. Research in the Sri Lankan apparel sector found that pay had a clear effect on whether workers stayed (Wickramasinghe & Sajeevanie, 2018). A fair salary makes employees feel respected. But pay alone cannot guarantee long-term loyalty. Many employees leave for good salaries if they lack growth or support at work (Kimunge, 2014). So pay matters, but it is only the starting point.

Benefits: Support Beyond the Place of Work

Benefits help employees manage their lives. These include medical insurance, transport, meals, leave, and childcare. Good benefits reduce stress, especially during tough times.

MAS Holdings is a good example. The company offers medical insurance, meals, transport, mental health support, and childcare facilities (MAS Holdings, 2024). These help employees balance work and family. During the country's economic challenges, MAS found that these benefits helped improve attendance and reduce turnover among female staff (IFC, 2023). Benefits show employees that the organisation cares about their wellbeing, not just their output.

Recognition: Feeling Valued Matters

Recognition is a simple but powerful tool. People want their hard work to be noticed. Recognition can be a thank-you message, an award, or public appreciation. When employees feel valued, they build a stronger emotional connection to the company.

Studies show that recognition improves commitment and reduces intentions to leave (Sara & Sareena, 2019). Dialog Axiata has made recognition part of its culture. The company regularly celebrates employee achievements and highlights top performers (Dialog Axiata, 2022). This motivates staff and builds pride. Recognition does not require large budgets. What matters is consistency and honesty.

Non-Financial Rewards: Growth, Flexibility and Culture 

Non-financial rewards can be more important than money in the long run. These include learning opportunities, career paths, flexible work, supportive leadership, and a positive culture.

Employees stay when they feel they can grow. A study in Sri Lanka showed that when workers saw opportunities for development, their motivation and retention increased (Fernando & Nishanthi, 2021). Dialog Axiata invests heavily in learning. Its “Dialog Academy” gives employees skills training and development pathways (Dialog Axiata, 2022). This helps workers build a future inside the company instead of looking elsewhere.

Flexible hours and supportive supervisors also improve job satisfaction. These rewards help employees manage stress, which reduces turnover.

Rewards Must Be Aligned For Employees and Communicated

A company may offer great rewards, but they only work if employees understand them and feel they are fair. Clear communication is essential. If employees do not know about a benefit, it has no impact. If recognition or pay increases seem unfair, employees may become demotivated.

The CIPD states that total rewards are effective only when they are transparent and linked to employee needs (CIPD, 2023). Even though MAS has a strong reward system, turnover increased during the economic crisis due to financial pressures and uncertainty (MAS Holdings, 2024). This reminds us that rewards must adapt to changing conditions.

Conclusion

Total rewards help organisations retain employees by offering more than salary. Pay builds the foundation. Benefits provide security. Recognition builds connection. Non-financial rewards support long-term growth. Sri Lankan companies like MAS Holdings and Dialog Axiata show how a balanced mix of rewards leads to stronger retention. When rewards are fair, communicated clearly, and aligned with employee needs, people are more likely to stay and perform well.

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Comments

  1. Madushani RathnayakeNovember 26, 2025 at 8:41 PM

    This essay explains that keeping employees depends more on a balanced system of rewards than on salary alone. Examples from MAS Holdings and Dialog Axiata show how pay, benefits, career growth, and recognition all work together to build loyalty. The key message is that rewards only succeed when they are fair, transparent, and aligned with employee needs—otherwise even strong systems risk losing talent.

    ReplyDelete
    Replies
    1. Dinusha Thirimanna - E285251December 5, 2025 at 6:01 AM

      Hi Madushani! You’re absolutely right. When rewards are not fair, transparent, or aligned with what employees truly need, even the strongest systems can fail to retain talent. I truly appreciate your feedback.

      Delete
  2. Udara AbeykoonNovember 27, 2025 at 5:25 AM

    That's a very insightful article on the role of total rewards! It effectively breaks down the components of the system and provides relevant, real-world examples from Sri Lankan companies like MAS Holdings and Dialog Axiata.

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    Replies
    1. Dinusha Thirimanna - E285251December 5, 2025 at 6:07 AM

      Thank you very much for your feedback. I’m happy to hear that the breakdown of the total rewards system and the Sri Lankan examples were useful and relatable. My aim was exactly that to make the concept practical and easy to connect with real workplaces.

      Delete
  3. Rajitha Fernando - ( E282786 )November 27, 2025 at 7:49 PM

    Excellent article! You've brilliantly broken down the concept of "total rewards" beyond just the paycheck. The use of local examples from MAS Holdings and Dialog Axiata makes the concepts very tangible and relevant.
    I particularly appreciate your final point about communication and alignment. A company can have the best benefits package in the world, but if employees don't understand it or feel it's applied unfairly, it can create more resentment than goodwill. This is a crucial reminder that total rewards is not just an HR checklist, but an ongoing strategic conversation about what employees truly value.

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    1. Dinusha Thirimanna - E285251December 5, 2025 at 6:12 AM

      Hi Rajitha, You’re absolutely right—when employees don’t clearly understand their rewards or feel they are applied unevenly, it can create frustration instead of motivation. And its true about your point about total rewards being a continuous strategic conversation, not just an HR checklist. Thank you for adding such meaningful depth to the discussion.

      Delete
  4. Nilakshi AshaNovember 29, 2025 at 7:21 AM

    A well-structured and insightful analysis that clearly shows how total rewards contribute to employee retention. You effectively break down pay, benefits, recognition, and non-financial rewards, and explain how each element influences long-term commitment. The use of Sri Lankan examples such as MAS Holdings and Dialog Axiata adds strong practical relevance and demonstrates how theory translates into real workplace outcomes. I especially like how you highlight that rewards must be aligned, fair, and well-communicated—something many organisations overlook. Overall, this is a meaningful and evidence-based discussion of why total rewards matter in retaining talent

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    Replies
    1. Dinusha Thirimanna - E285251December 6, 2025 at 11:07 AM

      Thank you for your thoughtful feedback! I’m glad the examples and practical aspects resonated with you. I agree that alignment and clear communication of rewards are often overlooked, and it’s encouraging to see readers recognize their importance in retaining talent.

      Delete
  5. Chanika BandaraDecember 2, 2025 at 1:14 AM

    Successfully charted its evolution, from Kahn's original concepts and the validation of tools like the UWES to its modern role as a data-driven business driver. I particularly appreciate the balance you strike by including the "black box" critique and the need for sustainable HRM a necessary reminder that we must look beyond just survey scores to foster genuine, long-term commitment. Excellent.

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    1. Dinusha Thirimanna - E285251December 6, 2025 at 11:08 AM

      I’m glad the discussion on both the evolution and the critiques of engagement resonated with you. I agree—looking beyond survey scores is crucial for fostering genuine, lasting commitment. Your comment reinforces the importance of a balanced, practical approach.

      Delete
  6. VenuDecember 6, 2025 at 10:06 AM

    Hi Dinusha,This is a very thoughtful and well-structured analysis of total rewards, and I like how clearly you differentiate pay from the broader set of practices that influence retention. I especially appreciated the Sri Lankan examples, because they bring the discussion to life and show how organisations such as MAS and Dialog operationalise benefits, learning, and recognition in practice. Your point that non-financial rewards such as development, flexibility, and supportive leadership often determine long-term commitment is well argued and supported by research. The emphasis on communication and fairness is a useful reminder that even strong rewards fail if employees do not understand or experience them consistently. Overall, a very relevant and balanced discussion.

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    Replies
    1. Dinusha Thirimanna - E285251December 6, 2025 at 11:09 AM

      Thank you so much for your kind and detailed feedback! I’m glad the Sri Lankan examples helped illustrate the points, and I completely agree that communication and fairness are key to making rewards truly effective. Appreciate your feedback and ot shows the importance of looking at both financial and non-financial aspects in driving long-term commitment.

      Delete

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