How to build a total rewards package employees will love

A paycheck alone no longer wins over great talent. Employees in 2026 want more. They look at pay, but they also weigh flexibility, health support, growth, and how a company treats its people. That full picture is your total rewards package.

This guide breaks down what a total rewards package includes, how it differs from employee benefits, and how to build one your team will love.

What is a total rewards package?

A total rewards package is the full combination of financial and nonfinancial rewards employees receive from an employer. It goes beyond base pay to capture the complete value of working at your company.

Here are some common total rewards package components:

• Base pay: Salary or hourly wages
• Bonuses or incentives: Commissions, spot bonuses, profit-sharing
• Health benefits: Medical, dental, vision, and mental health support
• Retirement benefits: 401(k) plans and employer contributions
• Paid time off: Vacation, sick leave, and holidays
• Flexible work options: Remote work, hybrid schedules, and flexible hours
• Recognition and rewards: Awards, peer recognition, and milestone celebrations
• Career development: Training, mentorship, and clear career paths
• Employee perks: Discounts, stipends, and commuter support

Total rewards vs. employee benefits: What’s the difference?

It's easy to mix up these two terms, but they're not the same thing.

• Employee benefits are one part of total rewards. Benefits usually refer to specific offerings like health insurance, retirement plans, paid time off, and leave. You can learn more in our guide to employee benefits for small businesses.
• A total rewards package is much broader. It includes pay, benefits, company culture, recognition, growth opportunities, flexibility, and the overall employee experience.

In short, benefits are a piece of the puzzle. Total rewards are the whole picture.

What to include in a total rewards package

A great total rewards package covers several types of value. Here are the main components of the total rewards package and why your team cares about each one.

Why total rewards matter

Total rewards matter because employees are weighing the full work experience. They may care about pay, but they also care about flexibility, wellbeing, career growth, and feeling valued. Employee expectations can also vary by age, role, location, and life stage.

Small businesses are also facing real pressure. According to the QuickBooks Small Business Insights survey, data shows that:

• 59% of U.S. small businesses expect operating costs to increase over the next three months
• 40% say workers’ pay is the primary factor driving increases in operating costs.
• 34% believe it’s harder to hire skilled workers compared to three months ago.

A thoughtful total rewards strategy for your small business can help:

• Compete for talent
• Support employee retention
• Make benefits and perks easier to understand
• Show the full value of working for the business
• Build trust through clearer pay and benefits communication
• Align people investments with business goals

It can also help employees see value they may miss. For example, an employee may know their hourly wage or salary, but they may not know how much the business contributes toward health benefits, payroll taxes, retirement benefits, paid time off, training, or scheduling flexibility.

How to build a total rewards package employees will love

Building a total rewards package for employees requires a thoughtful plan. Follow these eight steps to create something that fits your team and budget.

Step 1. Start with employee needs

Start by learning what your employees actually value. You can use surveys, exit interviews, candidate feedback, manager conversations, and benefits usage data.

Ask simple questions like:

• Which benefits do you use most?
• Which benefits are hard to understand?
• What would make your workday easier?
• What would make you more likely to stay with the company?
• What support do you wish we offered?

This helps you avoid spending money on perks employees don’t need or use.

Step 2. Define your budget

Next, decide what your business can afford. Look across pay, health benefits, retirement contributions, paid time off, stipends, bonuses, and other perks.

Be realistic. A total rewards strategy for a small business should support employees without putting the business at risk. You may need to start with the basics, then add more flexible rewards over time.

Step 3. Benchmark compensation and benefits

Compare your employee compensation and benefits package against similar roles, industries, company sizes, and locations. This can help you spot gaps in pay, benefits, or employee experience.

Benchmarking can also help with fairness. If employees are doing similar work, your pay ranges and promotion paths should be easy to explain and apply consistently.

Step 4. Balance core benefits with flexible perks

Start with core needs like pay, health benefits, PTO, and retirement support. Then look for flexible perks that help employees choose what matters most to them.

For example, one employee may value a home office stipend. Another may value paid training. Another may care most about predictable scheduling. Flexibility can help your package feel more personal without building a separate plan for every person.

Step 5. Include well-being beyond health insurance

Health insurance is important, but employee well-being often goes beyond medical coverage. Consider support for mental health, financial wellness, caregiving, flexible schedules, and stress management.

You don’t have to launch a large program right away. Even small steps can help. You might offer flexible hours, clearer PTO policies, access to financial education, or manager training that supports healthier workloads.

Step 6. Make recognition part of the package

Recognition helps employees feel noticed. It can also reinforce the behaviors and results your business values.

Recognition can include spot bonuses, peer shoutouts, service awards, or milestone gifts. The key is consistency. Employees should know what good work looks like and feel that their contributions matter.

Step 7. Communicate the full value

Many employees may not realize how much their full package is worth. Create simple summaries that show the full value of pay, employer-paid benefits, PTO, retirement contributions, perks, and development opportunities.

You can share this during employee onboarding, open enrollment, performance reviews, or annual planning. Keep the language clear. Employees shouldn’t need an HR background to understand what they receive.

Step 8. Review and adjust every year

Your total rewards package should change as your business and workforce change. Review it at least once a year using employee feedback, cost data, turnover trends, and participation rates.

Ask what’s working, what’s underused, and what employees keep asking about. Then update your package and communication plan based on what you learn.

Total rewards package examples

What works for a retail shop won't look the same as what works for a remote startup. Here are a few examples tailored to different business types.

These examples are starting points. Your best package depends on your budget, industry, team size, employee needs, and business goals.

Common total rewards mistakes to avoid

A few common missteps can undermine a well-funded package. Here's what to watch for and how to do better.

How to measure whether your total rewards package is working

A package is only as good as its results. Track both business and employee signals to see what's working and where to adjust:

• Offer acceptance rate
• Employee retention
• Turnover by role or department
• Benefits participation
• PTO usage
• Employee engagement survey results
• Exit interview themes
• Internal promotion rates
• Cost per employee
• Employee questions during open enrollment

No single metric tells the whole story. For example, low participation in benefits could mean employees don’t value them. It could also mean they don’t understand them. Review the numbers and the feedback together.

How QuickBooks can help manage total rewards

Building a total rewards package is easier when payroll, HR, benefits, time tracking, and employee information are connected.

QuickBooks Workforce helps businesses manage payroll, HR, benefits, time tracking, and employee self-service in one connected system. For employers building a total rewards strategy, QuickBooks can help keep workforce data organized, connect eligible benefits with payroll, and support a more streamlined employee experience.

Explore QuickBooks Workforce today and get the tools you need to manage your team.