1. Introduction
According to Kuhlman and Farrington, the concept of employee sustainability is defined as maintaining employee well-being for a long period of time [
1]. Organizations currently face many challenges and threats from internal and external environments. Recruiting and selecting the right employee is a significant challenge faced by HR professionals in organizations. There is a great need to build sustainable organizations that protect the environment [
2]. There are many factors that impact the decisions and operations of organizations. Human resource management (HRM) functions, such as recruitment, selection, training, and rewards, have been affected by these environmental forces. The COVID-19 pandemic is an example of a direct external factor that affected organizations during its outbreak [
3]. Many organizations increased their focus on financial and non-financial incentives during the pandemic to effectively manage their employees’ lives, well-being, and engagement [
4]. Organizations should formulate their reward strategies within the context of political, social, legal, economic, and employment relations and the labor market environment within which they are operating. This requires more adaptation and new, innovative HRM strategies that enhance employee performance, satisfaction, and motivation [
5]. These environmental forces have generally affected all HRM functions and specifically affected reward system components, including financial and non-financial incentives. The concept of a total reward system includes many components, such as total pay, attractive variable pay, benefits, recognition, and celebration. These components have a direct impact on sustainable talent performance [
6]. Human resource management (HRM) has used the concept of a total reward system as an effective talent management tool for years. Organizations should use financial and non-financial incentives to attract, motivate, and retain their employees [
7]. In addition, organizations should offer a suitable reward policy that meets the real needs of employees [
8]. HRM formulates effective reward strategies to attract, motivate, and retain talented employees since talented employees have a direct impact on sustainable organizational performance.
Organizations might attract and retain competent and talented employees who positively contribute to organizations’ missions by developing and implementing effective HRM strategies and, more specifically, effective total reward strategies. This might contribute to productive, motivated, engaged, and satisfied employees.
This study explores the impact of total reward strategies—including financial and non-financial incentives—in education. It aims to determine how sustainable total reward strategies affect employee performance, satisfaction, and motivation. The findings might impact the development of employees’ social lives at work. In addition, these findings might economically and environmentally impact organizations. This research uses international evidence from the Organization for Economic Co-operation and Development (OECD) database, which is considered one of the most reliable data providers in the world.
This empirical study aims to highlight how effective and sustainable total reward strategies—including financial and non-financial incentives—affect employee performance, satisfaction, and motivation at work. Employees faced many challenges during the COVID-19 pandemic, especially those who work in the education field. This study is important because it provides international evidence about keeping talented and satisfied employees in the educational sector in a post-pandemic context.
2. Literature Review
2.1. Total Reward Strategies and Sustainable Employee Performance
Organizations face environmental factors that differ from one industry to another and from one country to another. These environmental factors might affect the sustainability of HRM operations. A perfect reward system usually adapts to any changes created by the internal or external reward environment. HRM must alter and change its reward and incentives system to adapt to environmental changes [
9]. Therefore, the role of reward professionals is to regularly scan and analyze environmental forces, adjust to current market rates, and meet environmental challenges related to the reward system.
The COVID-19 pandemic has impacted an organization’s environment and its ability to attract, retain, motivate, and reward people [
10]. Globally, most organizations were forced to revisit their reward policies, systems, and strategies. COVID-19 might also have affected organizations’ plans to compensate their employees. Many organizations started to freeze or cut their employees’ payments, especially financial components such as regular allowances.
Rewarding employees is considered a vital aspect of HR practices. An effective reward strategy is formulated to align with an organization’s mission and strategy [
11,
12,
13,
14]. This might help organizations compete and attain their corporate goals.
Organizations should ensure alignment between their reward strategy and their corporate strategy. This might improve employee productivity, motivation, performance, and organizational effectiveness [
15,
16,
17]. In addition, an organization might consider its employees as the employer of their choice. This might help improve their morale, engagement, and motivational level.
The reward might include all tangible and intangible resources provided by organizations for employee contributions [
18,
19]. These contributions usually translate into high performance and should be directly related to the reward level [
20,
21].
Organizations adopt a fair rewards policy to attain their goals, promote higher performance, support work culture, define appropriate behavior, and align reward practices with people’s needs [
22]. Therefore, organizations review their reward strategies from time to time to ensure that they reflect the current market’s situation and remain competitive.
The concept of total reward is a hybrid system of rewards that aims to combine both the financial and non-financial elements of employees’ benefits [
23]. Employees should value both themselves and their work.
As a general rule, employers use the total reward to create a balance between the intrinsic and extrinsic rewards designed to motivate employees effectively. In addition, employers believe that approaches to rewards may not have the same effect on all employees’ motivational levels. Therefore, the total reward might help employers to use all possible ways to satisfy different people’s needs at work and create an engaging workplace [
6,
24].
The total reward concept is more comprehensive than the traditional compensation and benefits concept. Reward professionals should consider all changes in the internal and external environment when designing the total reward system. The total reward components might include base pay, variable pay, stock plans, and recognition programs, as well as supporting processes of these programs. In 2000, The Total Reward Association developed its model to include different, such as compensation, well-being, benefits, development, and recognition. Many studies attempted to determine how aspects of total reward are valued by employees. Therefore, the concept of total reward has been developed to include all components valued by employees at different times.
Employers design their total reward to improve the level of employee engagement at work [
25]. These components are used by many organizations as guidelines to design their total reward system [
26]. However, the idea of the total reward itself aligns with the outcomes of different motivational theories and tries to contain different elements valued by different employees.
The total reward must always encompass all elements that employees value in their employment relationship. These might include competitive compensation, benefits, development, and work environment [
27].
Reward professionals should monitor the perception of employees through regular surveys to understand their rewarding preferences. In addition, reward professionals should use the results of data collected from employees’ surveys to modify the total reward system and keep it up to date with the current needs of all employees.
Hypothesis 1 (H1). Total Reward Strategies Improve Talented Employees’ Performance.
2.2. Financial Reward Strategies and Talented Employees’ Satisfaction
An effective reward system should contain both financial and non-financial forms of rewards. These components should be integrated to achieve the overall effectiveness of the reward system.
The financial rewards strategy includes all rewards that have a financial value and affect employees’ total remuneration. It includes base pay, contingent pay, skills pay, and financial recognition schemes [
28]. Researchers have studied the impact of financial rewards on employees’ motivation, engagement, and performance [
29,
30,
31,
32]. It might impact the organization’s output and translate into high performance [
33].
The value of financial incentives in the eyes of employees is influenced by many factors, such as job evaluation, job position, business environment, etc.
Organizations should develop financial incentives to improve their attractiveness as well as employability rate. Although financial reward is important for employees, organizations should consider market rates and employees’ total costs. Previous researchers have addressed myths related to the impact of the financial reward, such as labor rates and labor costs having an equal impact; therefore, managers should control labor rates to decrease labor costs as well as employee costs [
34].
Generally, employers use the total reward as a means to create a balance between the intrinsic and extrinsic rewards designed to effectively motivate employees. In addition, employers believe that reward approaches may not have the same effect on all employees’ motivational levels. Therefore, the total reward might help employers to use all possible ways to satisfy different people’s needs at work.
The total reward concept is broad than the idea of traditional compensation and benefits. Reward professionals should consider all changes in the internal and external environment when designing the total reward system. The concept includes different elements, such as development opportunities, and flexible working arrangements, in addition to the wider pay and benefits package [
35,
36,
37]. As stated by the WorldatWork model, to effectively reward people, a total reward system should include the five main reward elements: remuneration, benefits, work–life balance, performance and recognition, and development and career opportunities.
The main components of the financial system under the umbrella of a total reward system might include payments, remunerations, and other benefits. Organizations aim to formulate their payment system to be fair and consistent. It should reflect and tie to the performance system. The pay-for-performance system is seen as merit pay that focuses on the direct relationship between job performance and the value of rewards [
38]. Previous researchers found a positive correlation between the pay-for-performance system and employee satisfaction [
39].
Traditionally, organizations pay salaries, bonuses, and other benefits to motivate their employees. All these types of financial incentives are classified under financial reward. These practices are supported by different motivational theories that encourage the idea of positive reinforcement for employee behavior. For example, the expectancy theory states that people will be motivated when they expect worthwhile rewards for their efforts. People will behave and react positively if they expect positive outcomes and benefits that are greater than their efforts [
40].
Hypothesis 2 (H2). Financial Reward Strategies Improve Talented Employees’ Satisfaction.
2.3. Non-Financial Reward Strategies and Talented Employees’ Motivation
In the modern world, organizations face the direct implications of the COVID-19 pandemic. During this situation, reward professionals need to consider different and inclusive elements of reward when formulating reward strategies, including people’s well-being, health and safety procedures, and mental health programs.
Organizations use many practices as non-financial incentives, such as team events, flexi-arrangements, subsidized meals, training programs, and additional holidays. These practices have a limited time to affect an employer’s current performance objectives [
41].
Organizations use the total reward system as a strategic tool to attract and retain motivated, engaged, and high-performing employees.
This might be easily achieved if an organization creates and sustains an effective reward system that combines financial and non-financial incentives. The total reward association developed its model in 2000 to include different components, such as compensation, well-being, benefits, development, and recognition.
Recognition schemes, career development, and other non-financial incentives consider key motivators for employees. Some studies on total reward systems attempted to explore those factors that are most important for attracting and retaining R&D workers. Some of these studies found that work itself ranked as the most important factor, followed by long-term career opportunities and unique work culture, followed by cash compensation, although the latter was less of a concern for employees [
42].
Non-financial rewards appear to be very important, especially during the period of the COVID-19 pandemic. Organizations around the globe that decide to focus on this type of incentive might include mental health and well-being programs. These programs are more cost-effective than financial incentives.
Organizations might use non-financial incentives to manage and control employees’ behavior and performance. However, some may criticize the impact of non-financial rewards due to employees’ lack of awareness of their importance. In addition, employees might value the same non-financial reward differently according to different factors, such as experience, position, and current needs.
Hypothesis 3 (H3). Non-Financial Reward Strategies Correlates with the Talented Employees’ Motivation.
2.4. Talent Management
COVID-19 has created an added risk for talent management operations. Many businesses are finding it difficult to attract, retain, and motivate their talented employees during the pandemic. Thus, talent management is considered a crucial issue in today’s business environment.
The concept of talent management has been defined in different ways since it first appeared during the 1990s. This concept and other concepts, such as talent strategy, succession management, and human resource planning, are interchangeably used by researchers [
43]. Researchers define talent management as the ability of the organization to ensure that the right employee is in the right job at the right time [
44]. The concept of talent management is described as a collection of the main human resource practices, operations, functions, and activities, such as recruitment, selection, training, professional development, and performance management. Organizations try to attract, retain and develop the talent pool to meet the competition of market needs. Talented employees should be treated differently. HR departments need to formulate effective strategies that encourage employees to positively participate and make a difference in the organization’s market.
Talented employees with the right skills and capabilities are distinguished from other employees by their capital, which enables them to make a difference inside organizations and add value to their customers [
45,
46,
47]. HR managers should understand the real working needs of their talent pool. To enable talented employees to make a difference, an organization should demonstrate great involvement behavior.
Talent management is the critical and strategic function of HRM in all organizations. Talented employees will help organizations to have a competitive advantage and sustain their business operations. A distinctive competence can easily be developed through a talent management strategy. A strategic HR is one that develops a partnership with their employees. They need to build positive expectations in the working environment. This will help people to be creative, participative, and competitive.
Talented employees are expected to generate value in the educational sector. Thus, the HR department in the educational sector should formulate and implement effective talent management policies that align with an organization’s corporate strategy.
During this scenario, reward professionals need to consider different and inclusive elements of reward when formulating reward strategies, which might include people’s well-being, health and safety procedures, and mental health programs. This can be reflected in the following research model (
Figure 1):
3. Research Methodology
3.1. Research Design
This paper uses a quantitative research method to highlight how reward strategies, including financial and non-financial incentives, affect talent management. It uses reliable international data collected through the Teaching and Learning International Survey (TALIS). A representative sample of teachers and schools in 47 countries were asked annually about their attitudes towards their working conditions, including the total rewards. TALIS aims to provide valid, timely, and comparable information on education resources and facilities to help countries’ leaders review and define policies to improve and develop teaching professions. This will translate to a high level of job satisfaction for working employees.
3.2. Population and Sample
The main population of the data is the lower secondary teachers and leaders of schools in 200 schools per country/economy who were randomly selected (20 teachers and one school leader per school). The total participants include 47,551 (30.9%) male teachers and 106,123 (69.1%) female teachers. About 153,682 lower secondary teachers responded to this survey.
3.3. Measures
The TALIS uses different statements to construct variables related to talented employee satisfaction and motivation. The survey adopts LIKERT” 1 = strongly disagree; 2 = disagree; 3 = agree; 4 = strongly agree). To assess employee satisfaction, the survey contained relevant statements such as: “Feeling I am satisfied with my performance in this school; Feeling I enjoy working at this school; Feeling I would recommend my school as a good place to work; Feeling I think that the teaching profession is valued in society”. In addition, the reward satisfaction was assessed by different statements, including “Incentives received Non-monetary support for activities outside working hours; Incentives received Reimbursement or payment of costs; Incentives received Materials needed for the activities; Incentives received monetary supplements for activities outside working hours; Incentives received Non-monetary rewards; Incentives received Non-monetary professional benefits; Incentives received increased salary”.
3.4. Data Analysis
This study used the SPSS software version 24 to analyze the collected data as provided by TALIS in SPSS file format. This file includes data related to each variable of this study. The Pearson correlation was used to analyze the relationships between the main variables. The data include the financial incentives received by employees during their regular working hours. In addition, all data on non-financial benefits, reimbursement, or any cost of living indirect payments were analyzed to assess employees’ satisfaction with these non-financial benefits.
4. Results
Table 1 shows the positive correlation between the total rewards strategies and talented employees’ performance (B = 0.079,
p < 0.01). Thus, employees perceived that an effective reward strategy that reflects both financial and non-financial benefits improved their performance [
21,
48]. This happens through sustainable motivation, which translates into a high level of job satisfaction. The role of the organization’s management is to adopt all available tools to attract, retain, and motivate their talented employees. This finding corroborates the results of previous studies on total reward and its relationship with employees’ performance. This supports the idea of adopting combinations of variable pay, recognition, celebration, and benefits as essential strategic tools to provide a total reward package [
6,
49,
50,
51].
Table 2 shows a strong positive correlation between financial reward strategies and talented employees’ satisfaction (r = 0.370,
p < 0.01). The Pearson correlation coefficient is strong and positive. Thus, employees perceived that suitable financial rewards might improve their performance at work [
52]. When there is a high level of satisfaction, organizations can generally improve the retention rate among all employees, especially those who are talented [
53].
This finding supports H2 and corroborates the results of many previous studies on this relationship [
6,
54,
55,
56,
57].
Table 3 shows statistically significant correlations (positive) between non-financial rewards and talented employees’ motivation (r = 0.427,
p < 0.01). Thus, these results support H3, which also agrees with previous findings [
21,
58,
59,
60,
61]. It appears that organizations design their total reward system to include a portfolio of non-financial incentives to improve the employees’ motivational levels. This can help organizations attract, retain, and engage with their employees [
58].
Table 4 and
Table 5 show population characteristics.
Table 4 shows the distribution of respondents. Approximately 69.1% are female, and 30.9% are male. This reflects a high level of participation and diversity in terms of gender.
Table 5 shows our study’s importance; approximately 47 countries participated in the TALIS survey. The database of TALIS provides researchers with deep opportunities to explore their ideas.
5. Discussion
This study aimed to explore the impact of total reward strategies—financial and non-financial—on the talented employees’ sustainable performance, satisfaction, and motivation. We mainly focused on talented employees in the educational sector, which considers one of the sectors with the greatest impact on employees’ productivity.
This study used international data to highlight how total reward strategies—including financial and non-financial incentives—affect talent management, especially in the educational sector.
The results of this study show a positive correlation between total rewards and talented employees’ performance. This finding supports the results of previous studies [
54,
62] and reflects the importance of designing and implementing an effective total reward system that aligns with the real needs of talented employees.
Management in the educational sector should create and sustain an effective reward system that adheres to market changes and people’s preferences. Talented employees should be encouraged to participate in the continuous development of the total reward system.
The idea of a sustainable total reward concept should be developed to meet everyday changes. Management should continuously review and develop current reward practices. There is a need to develop sophisticated reward tools that satisfy the real needs of talented employees at all times.
In addition, the results of this research show a strong positive correlation between financial rewards and talented employees’ satisfaction, which was verified by previous research [
63,
64]. The issue of employee satisfaction is considered a very important field of research. The level of sustainable employee satisfaction can easily be improved by creating a total reward system that aligns with the organization’s mission, meets market needs, and is appreciated by all employees.
6. Conclusions
Management in the educational sector should assess and monitor the satisfaction level among all members and attempt to understand the most impactful factors on this level. This leads to improving talented employees’ commitment and overall performance.
There is a great need to create and sustain an effective reward system that aligns with an organization’s strategies, and the issue of talented employees is especially important. There are many challenges that organizations are currently facing. Therefore, it is highly recommended that sustainable HRM practices are adopted to enable organizations to attract, retain, satisfy, motivate, and improve their overall performance.
Formulating a total reward strategy to include financial and non-financial incentives is essential. In addition to providing financial incentives, such as base pay, allowances, and other compensation schemes, it is also recommended to provide non-financial incentives, such as professional development, well-being initiatives, and flexible working arrangements. HRM should assess the real needs of talented employees and attempt to accommodate these needs. This practice might help to attract, retain, motivate, and improve the performance of talented employees.
7. Theoretical Contributions
This study highlights the significant role of the sustainable total reward strategy, reflecting the impact of financial and non-financial incentives on talented employees. We show how sustainable total reward strategies are related to talented employees’ performance, satisfaction, and motivation. The findings of this research are supported by well-known theories, such as motivational theories, job satisfaction theory, and talent management practices. Managers can improve the effectiveness of HRM practices by adopting evidence-based management. Thus, the theoretical framework of this study is crucial for improving managerial decisions.
8. Practical Implications
This study highlights the importance of a sustainable total reward strategy, especially during the COVID-19 pandemic. The findings of this study offer different practical implications, especially for the HRM decision-makers. HRM specialists and, more specifically, compensation and benefits professionals can use the findings of this study as evidence to thoroughly explore their organizations’ total reward strategies. Studying the effective components of both financial and non-financial incentives is especially important. An effective total reward strategy that creates a balance between these components is expected to improve an organization’s talented employees’ performance, satisfaction, and motivation, leading to a high and sustainable overall organizational performance.
9. Limitations and Implications for Future Research
Future studies should focus on how other sustainable HRM practices, such as recruitment, selection, training, and performance appraisal, might affect talented employees’ performance, especially during the current and future pandemics, such as the COVID-19 pandemic.
This study focuses on talented employees in the field of education. These findings might show different results in other sectors, such as banking and healthcare, etc. Future research can highlight the impact of sustainable reward strategies on talented employees’ sustainable performance, satisfaction, and motivation in other organizations facing different environmental challenges. In addition, future researchers should study the impact of sustainable HRM practices in general to assess both direct and mediating relationships with other variables.
Author Contributions
Conceptualization, M.E. and Y.S.; methodology, M.E.; software, M.E.; validation, M.E. and Y.S.; formal analysis, M.E.; investigation, Y.S.; resources, Y.S.; data curation, Y.S.; writing—original draft preparation, M.E.; writing—review and editing, M.E.; visualization, Y.S.; supervision, Y.S.; project administration, M.E.; funding acquisition, M.E. All authors have read and agreed to the published version of the manuscript.
Funding
This research was supported by the Deanship of Scientific Research, Vice Presidency for Graduate Studies and Scientific Research, King Faisal University, Saudi Arabia, grant number [GRANT2282].
Institutional Review Board Statement
Not applicable.
Informed Consent Statement
Not Applicable.
Data Availability Statement
Data available at OECD, TALIS Database: OECD (2022), “TALIS Teaching and learning international survey—indicators”, OECD Education Statistics (database),
https://doi.org/10.1787/data-00698-en (accessed on 1 November 2022).
Acknowledgments
The author gratefully acknowledges financial support from the Deanship of Scientific Research, Vice Presidency for Graduate Studies and Scientific Research, King Faisal University, Saudi Arabia.
Conflicts of Interest
The authors declare no conflict of interest.
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