Nearly half of top-performing companies provide total compensation statements to employees (compared to 36% 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 2019 Compensation Best Practices Report (CBPR) surveyed 7,030 executives, line of business managers, HR leaders and compensation practitioners at a variety of organizations across sizes and industries, both public and private. Nearly half (43%) of top-performing companies in the current survey provided total compensation statements to their workforce, compared to 36% of typical companies.
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.
Paycor Can Help
More than 30,000 medium-sized and small businesses trust Paycor to help them manage their most valuable asset – their people. Paycor is known for delivering modern, intuitive recruiting, benefit, HR and payroll software, but what distinguishes us is our singular focus on helping business leaders, entrepreneurs and HR professionals make a real difference in their organizations. Use our interactive Solution Finder to uncover the Paycor solutions that are right for your organization.
Source: Payscale Survey, 2019