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Show Employees Their Hidden Paychecks

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Show Employees Their Hidden Paychecks

A top-notch workforce is essential to your company’s success. It’s always important to have engaged, loyal employees, and in an economic downturn, it’s more critical than ever to keep employee morale high to maintain the competitive edge top-quality employees bring.

One way you keep your best employees on board is by offering a generous benefits package. But do your employees fully appreciate your investment? According to many surveys, they don’t. Employees tend to focus on their share of the costs, and many grossly underestimate the amount their employers pay. Employees also tend to underestimate what employers pay for other benefits such as paid time off (PTO), tuition reimbursement, pension or 401(k) plans and statutory benefits like employer-paid Social Security.

So how do you make sure employees know and appreciate how much you spend on their benefits – traditional benefits like health, dental and life insurance as well as benefits like PTO and statutory benefits? Communication is the key.

One of the most effective ways to drive home the point is to present the full costs of all the benefits you provide as an employer in the form of a “hidden paycheck" or a total compensation statement. For example, if you pay an average of 20% of an employee’s salary on providing a traditional benefits package, an additional 5% on matching 401(k) contributions and approximately 10% each on PTO and statutory benefits, you could provide a “hidden paycheck” communication or benefit statement outlining the following for an employee who receives an annual salary of $50,000:

YOUR HIDDEN PAYCHECK

$50,000 in salary

$10,000 in employer contributions for health, dental and life insurance

$5,000 for time off

$2,500 in 401(k) contributions

$2,500 for statutory benefits

$70,000 = TOTAL COMPENSATION

Of course, the amounts will vary depending on how much you contribute to employee benefits. But as you can see, even with fairly conservative estimates, the amount is significant. A hidden paycheck communication gives employees a big-picture view and increases their appreciation for employer contributions.

There are a variety of ways in which you can present hidden paycheck information. It can be as simple or elaborate as you choose. At myBenefitStatements, we have a number of formats available (click here for sample formats). Or you could make it an annual tradition, presenting hidden paycheck information or a benefit statement at year-end in the form of an annual total pay statement for every employee.

No matter how you choose to convey the information, revealing hidden paycheck amounts is a worthwhile endeavor. It can help you get the word out about how much you actually spend, raising employee awareness of your investment in your human capital. It can build valuable good will, which is a critical commodity, especially in times of economic hardship, when your need for a competitive edge is greatest.

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Get Creative with Benefits Strategies

Categories - Employers, Employers, News

In an economic downturn, companies can struggle to maintain their existing employee benefits programs, much less think about adding new ones. In times like these, low- and no-cost measures can help a company to keep its benefits programs vibrant and evolving to meet employee needs. Here are some such measures to consider:

• A recession may make it impossible to allocate additional company dollars to benefits, but an employer can give employees time and convenience instead, through various strategies-
  • Set up a direct deposit program for employee paychecks. Depending on the financial institution used, the direct deposit program may be a bridge to discounted financial services, such as free checking, waived ATM fees, and the like.
  • If business needs permit, give employees more control in balancing their work and personal demands through some form of flexible scheduling. This could include flexible hours, summer hours, compressed workweeks and telecommuting. Some employers find that employees on flexible schedules are better performers on the job, because they can more readily attend to personal issues and thus be more focused when at work.
  • Investigate adding voluntary benefits. These no-cost-to-the-employer benefits can add a dimension to your benefits programs that can be difficult to achieve through a traditional benefits package. Employees are able to buy benefits at prices more affordable than what is available in the individual market; they have the convenience of payroll deduction; they also have the convenience of benefits being marketed to them, rather than having to seek them out on their own.
  • Investigate discount programs. In these programs vendors offer their products and services at a discount to a company’s employees. The vendor’s motivation is access to the employer’s workforce, with the hope that the discount will steer buyers in their direction rather than to their competitors.
  • Although many workplaces have gone more casual, others maintain specified dress codes. Employees appreciate when certain days are designated as casual-blue jeans okay-and the atmosphere that can accompany a casual dress day can give the workplace a lift.
• Examine existing benefits programs to see what works and what doesn’t, and ask whether dollars should be reallocated to better meet employee needs. For example, are there medical plan options in which few employees participate? A streamlining of the available options can reduce administrative and program costs alike.
• Some benefits have multiple uses but may have been promoted narrowly, so that employees may not understand their true value. Employee assistance programs (EAPs), for example, may be perceived as a source of help for substance abuse problems, but EAPs also typically offer a wide range of services many employees could avail themselves of, such as childcare and eldercare referral and assistance with financial issues and debt counseling.
• Employees often underestimate the value of their benefits and compensation package, but there’s a good reason for this-many companies neglect to inform employees of what the company spends to make the benefits offerings available. Employees see their own contributions for medical, dental, etc., on their paycheck stubs, but other than during open enrollment-if even then-many companies simply never let employees know what the company pays for employee benefits. Consider distributing “total compensation statements,” which show employees the actual amount the employer is compensating them, through salary, mandated benefits (e.g., Social Security, Medicare), and the company’s employee benefits program.

As the economy improves and benefits budgets become less constricted, these measures can remain in place, continuing to enhance the value of your benefits package in employees’ eyes.

Click on the Contact Us in the main menu in order to discuss how we can help you to communicate with your employees.