With an estimated 37.4 million people expected to quit their jobs this year according to Gartner, it’s no wonder that turnover tops the list of concerns for business owners.
Naturally, many employers are curious about what will make employees stay. Some job jumpers want a higher salary, others want work-from-home flexibility and better benefits. But before the list of creative solutions grows any longer it’s also important for companies to take inventory of what is already being offered in addition to salary. One way to show employees how much they are valued in your organization is with a total compensation statement.
What is Total Compensation?
Total compensation is the full monetary amount that comprises salary, all benefits (insurance, time off, retirement, profit sharing) and any other incentives a company offers an employee in return for their services. A total compensation statement provides employees with a full breakdown of all salary, benefits and rewards.
Total compensation statements are only recently gaining in popularity. 42% of employers reported using total compensation statements according to a recent Payscale report. The hope is that the information will help to increase morale and engagement by offering transparency about all of the investments companies make for employees.
How is compensation related to engagement?
Employees are more likely to have high engagement if they feel appreciated by their employer. A major component of the appreciation factor is total compensation, including salary, bonuses, health insurance, 401(k) matching and other benefits. According to employee engagement expert Leigh Branham, “There is no more emotionally charged issue for employees than what they are paid for their contributions.
What we make doesn’t just pay the bills — it measures our worth in the most material way.” This is why inadequate compensation drives employees away. It’s not necessarily because they can make more money working at another company, but because they feel devalued and unrecognized.
What is in a Total Compensation Statement?
Put simply, a total compensation statement is a report that displays a graphical compensation breakdown per employee for their wages, benefits, and taxes. This includes but is not limited to:
- Compensation/Base Pay
- Paid Time Off
- 401K Contributions
- HSA Contributions
- Wellness allowance/gym membership
- Health Insurance
- Dental Insurance
- Vision Insurance
- AD&D Insurance
- Life Insurance
- Short-term disability insurance
- Long-term disability insurance
- Profit Sharing
- Equity or Stock Purchase Opportunities
What Are Some Total Compensation Statement Best Practices?
Whether or not you plan to increase employee pay or add benefits in the near future, communication is still critically important. Here are a few best practices for discussing compensation and providing a total compensation statement.
- Be open and honest with employees about how pay is determined
- Show employees the breakdown of their total compensation package
- Explain that their compensation goes beyond their paycheck, and that you are investing in their well-being through health and retirement benefits.
- Take a Pulse survey to ask employees about what is most important to them and why they choose to stay with your organization
An employee who is not completely satisfied with his or her current paycheck might be surprised to see the total investment you are making.
How Paycor Helps
Paycor’s Compensation Planning product allows you to see total compensation for each employee, including wages, benefits and taxes. The easy-to-read format makes it perfect for sharing in the context of an open conversation with each employee about his or her compensation package.
When employees understand you value them, they are more likely to go the extra mile for you. Being transparent about the investment you have made in their total compensation is an easy way to show your appreciation for their dedication and hard work. Contact us to learn more about Paycor’s Compensation Planning and Reporting and Analytics Tools and start reaping the bottom-line benefits of higher engagement and retention.