The most popular way for a company to communicate salary and benefits to employees is through a superbly done total compensation statement. It gives employees a good idea of their input to the organisation. The expectation of producing such a statement is that with time the workforce will be a happier one as productivity and good will changes.
Most human resource departments and managers have come to realise how important total compensation statements are; they give potential talent a chance to know how the organisation remunerates its employees. The statement indicates the full picture of compensation and benefits program in the company.
Managers and HR teams work really hard to retain their best talent. In a survey from PayScale, it was discovered that among 60 percent of employers the most disturbing concern is that their best employees will be poached by their arch competitors. Another 67 percent of employers indicated that one of the most difficulty things they face is finding top talent.
In another study from Towers Watson, only 52 percent of employees actually thought their company were doing a great job of explaining salary and compensation programs. 29 percent of employees in yet another study indicated that the way communication on pay was done needed to change.
A 2014 survey from PayScale conducted with 5,000 executives and HR professionals also found out that 53 percent of managers thought their companies offered little training on how to talk and deal with pay and reward programs while up to 70% indicated that employee retention was a high or top concern.
It’s important to remember compensation program management requires a lot of balancing between the needs of the staff and those of the company. There’s need for a competitive salary that the company’s budget can handle, including the benefits package. In turn, the result would be a better company, team, employee and individual performance all round.
Employees desire to earn an amount commensurate with their input. They want to feel valued for their talents and time they offer the company. At the end of the day, a total compensation statement must be a win-win situation for the organisation. This is why conversations on compensation are important. The statement is all about managing the expectations of the employees.
As a manager, you must be able to effectively communicate benefits to employees in a total compensation statement. The statement can then be look at by the staff any time they would like to. There are a number of ways of presenting benefits in such a statement.
Folllow this guide for a successfull Total Compensation Statements Communication.
1. All benefits need to be explained
Regardless of an employee’s job level, it’s important for the benefits to be explained crisply. A manager can get the best out of total compensation statement by communicating to every employee in the company about what the company is already offering them. It’s obvious some executives, higher level positions and sales team might have some extra benefits, but the important thing is ensuring all the gains provided to all employees have been outlined.
2. Intangible benefits need to be included
Companies also offer diverse intangibles beyond financial incentives. Putting them into dollar value is hard. Nonetheless, since they are able to bring in a lot of significant advantages to the compensation strategy of the company, they should be listed clearly. These intangibles include corporate wellness, work-life balance, flexible work schedules, staff training and career development as well as special endowments and discounts, if any.
3. Employees are different and benefits mean differently to them
Clearly, different employees approach various benefits differently. Since total compensation statements cannot fit all employees, you need to look into this clearly. It means that employee demographic is worth considering since the staff might be interested in different areas of their benefits than others; some aspects will appear more valuable than others. A good example is that an older employee will pay more attention to the retirement plan than a younger employee who might think a discount or bonus arrangement is better. It means all areas of the employee pool you have should be covered in a total compensation statement.
4. Boost with an employee-centric company look
Communicating benefits to the top talent you intend to hire is very important. Boost it by creating a benefits summary on the company website completed by a brief look of the culture and corporate mission of the corporation, the management and success stories. As a result, the company will create an impression of being employee-centric.
5. Deliver benefits summary as consitently as possible
It’s important that a total compensation statement program works. This can only be done if statements are distributed strategically at a specific time. Total compensation statements should be scheduled for delivery when needed most by the staff, such as after an enrolment or following the mail out of tax-earning statements. These statements are important to employees and can ben sent by mail or posted online to be accessed by employees all year round.
It is important for a total compensation statement to be as explicit, straightforward and clear as possible on compensation as transparent as the organisation is comfortable with. The compensation statement is about selling the information to the staff. In the process, the company ensures employees have seen the value the company offers, manages all their expectation while giving them a reason to believe and accept the programs.
It is also important to have additional details included in the total compensation statement. In nutshell, the totality of the compensation statement is confirmed if such details as the following are included:
- How the calculation of base pay is done including the pay range and pay grade structures as per education and experience levels
- Source of the latest market data on pay adjustment
- Clear explanation on current salary changes including decrease or increase in connection to performance, job market, and trends in cost of living as well as bonuses and raise criteria, payments and award timing among other details
- How tuition reimbursements, stock options and health insurance and other benefits are factored into the total compensation statement
- Career and learning development opportunities, if any, with clarity on advancement criteria as well as performance markers
- Any other extras and attractive programs that don’t always appear in payslips such as free lunches on Wednesdays, top employee of the week programs, ceremonies for top performers among others
What to avoid in a total compensation statement?
When it comes to employee total compensation statements and discussions about employee compensation as a whole, there’re things worth avoiding due to the problems they usually bring later.
Ignoring total compensation
Not every organisation is able to provide the highest wages but offering its employees the best total compensation packages possible is the way to go. Managers and HR must work to balance a workable total compensation framework and retaining the top talent while ensuring labour costs remain manageable.
Most companies, especially smaller businesses, usually fall into the trap of verbal individual agreements without documentation back up. The documentation sometimes disappears with the passage of time. It’s important to document benefits package and other verbal compensation agreements to avoid open interpretations in future that could hurt the reputation of the company. As more employees join the organisation, the situation will be complicated further if agreements were verbally agreed upon.
Many managers trying to attract the best talent end up making promises to desperately woo them into their organisation without a critical assessment of the company’s financial position at the time. As the company grows, so will be the perks and benefits, a fact most companies forget.
Failure to communicate
It’s critical for employees to have an idea of the compensation plan while hiring them and throughout their tenure. This is a mistake most companies make yet providing total compensation statements, perhaps annually, gives the staff a detailed breakdown of their indirect and direct compensation within a certain period. Communicating this way will retain employees while motivating them to work even harder.
Most employers would like their employees not to talk about benefits and salary with other members of staff but this is virtually impossible. If they realise the company has been offering multiple benefits after comparing their compensations, the result can be low productivity, dissatisfaction, low morale and top talent drain. Consistent compensations considering performance of each employee will stop this from happening.
Ignoring the importance of human ressource department
There are so many issues surrounding employee compensation and small growing businesses forget how critical HR is to a company. The HR team makes sure the compensation is not just legally compliant but also consistent among all employees.
Benefits and compensations are critical in ensuring top talent is retained and attracted while maintaining a workforce that fosters excellence. The information in the total compensation statement determines whether this will happen.