Why develop a reward strategy?

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NHS organisations have flexibility in the application of the national frameworks and an increasing degree of local flexibility to vary terms and adopt alternative approaches.

By adopting a clearly defined reward strategy, organisations can celebrate their diversity and distinguish themselves in a competitive employment market. Two critical areas organisations are looking to HR to support are the recruitment and retention of high calibre staff and for those staff to deliver on performance. 

Recruitment and retention

Pay and rewards are the biggest cost item for employers within NHS organisations spending up to 70 percent of their annual budget on staffing costs. Their effective use is therefore critical to both achieving a productive and efficient organisation and a workforce that understand and appreciate the full value of their employment package. The Total Reward statement (TRS) has been developed by NHS Business Services Authority (NHSBSA) to give staff a clear picture of their total reward package. Employer characteristics and environments differ across organisations, so a locally focussed reward strategy that is aligned to the organisations strategic objectives allows for this diversity to be reflected.

The NHS has a turnover of approximately 10,000 staff every month. Developing an effective reward strategy for your organisation that offers a compelling and competitive total reward package will underpin the recruitment and retention of staff of the right calibre.


Total reward is a critical means of engaging staff to deliver on the organisation’s performance goals. The reward strategy should support the alignment between staff behaviours and the values of the organisation: setting out what the employer values and what it wants to reward and recognise. It can also provide the opportunity to recognise achievements and growth in skills and/or responsibilities.

We  consider both of these areas in more detail in phase two, 'development and design', of the reward strategy toolkit.

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