More than half of top-performing companies provide total compensation statements to employees (compared to 38% of typical companies).
Why? Because, sharing information on the total compensation works!
Communicating the value of the entirety of their compensation is a key to improving employee engagement and retention. Most employees take only salary into consideration when thinking about compensation, but there’s far more in the pot.
A total compensation statement (TCS) is pretty self-explanatory: It’s a document that outlines in detail an employee’s direct and indirect compensation – including all cash income plus the value of all benefits received. The total compensation statement is often referred to as a hidden paycheck or a total rewards statement because most employees focus on their net pay and either forget or underestimate the value of their benefits package.
PayScale’s 2017 Compensation Best Practices Report (CBPR) surveyed 7,700 executives, line of business managers, HR leaders and compensation practitioners at a variety of organizations across sizes and industries, both public and private. More than half (53%) of top-performing companies in the current survey provided total compensation statements to their workforce, compared to 38% of typical companies. Larger organizations are more likely to provide total compensation statements (51 percent of enterprise, vs. 40 percent of mid-size and 38 percent of small organizations.)
A total rewards compensation statement empowers employees by giving them a more in-depth understanding of their compensation, encouraging them to think beyond the dollars and cents of their salaries and helping them understand the total value of their compensation. This empowerment can increase engagement and retention, as well as the quality of new hires.
What should I include in a total compensation statement?
In addition to listing base salary, a TCS should any of these applicable items:
- Vacation/PTO/sick days/other paid leave
- Mandated Benefits – Workers’ Compensation, Social Security, Medicare and FUTA tax
- The value of insurance plan premiums (health, dental, vision, life, STD and LTD) paid by the employer
- Employer contributions to a 401(k), 403(b) or pension plans
- Employer contributions to flexible spending accounts or health savings accounts
- Stock options
- Value of other benefits, such as:
- Mobile phone
- Company computer/tablet
- On-site child care
- Company-provided lunches
- Gym membership
- Public transportation and parking subsidies
- Tuition assistance
- Company discount programs
- Company car
Tips for Communicating the Value of the Entire Compensation Package
As with any type of company communication, you have to make your total rewards statements compelling and attention grabbing to help ensure your employees read them. You should:
- Think like a marketer. A total reward statement is a type of marketing communication. You are “selling” your organization to your current employees. The statement should contribute to promoting your brand as an employer of choice.
- Make it visually appealing and simple. If your statement is cluttered, boring or difficult to understand, your employees will toss it. Use a lot of color and make the language clear and simple.
- Use charts and graphs. Tell a story with images that can help employees understand their compensation at a glance.
- Choose the optimal distribution method. Every company is different. You know your employee base so carefully consider the best method for distributing your total compensation statements. For some businesses, posting statements on the company portal makes the most sense; for others, print statements mailed to employees’ homes are more effective.
Communicating total rewards and compensation makes good business sense when it comes to outlining the full extent of your company’s value. By implementing a regular system for gathering and distributing this information, your organization can better demonstrate the investment in its employees.
For more tips on how you can use your benefits program to attract and retain top talent, check out our HR Center of Excellence Resource hub here.
Source: Payscale Survey, 2017