How do you calculate total compensation?
Total compensation (also known as total rewards) encompasses an employee’s base salary, paid time off, and other company-paid benefits. This might include things like health insurance, retirement, and even perks like tuition reimbursement or cell phone allowances.
So in other words – an employee’s salary is only one part of their complete compensation package.
Providing a total compensation statement to employees is a valuable tool for your human resources. It provides the truest measure of the value your company pays for each individual. These statements make it easy for your employees to crunch the numbers, and see visually what they make with you.
Illustrating the value of benefits provided over the course of a year is useful both to you as a company and to employees. But how do you go about calculating total compensation?
Earnings often includes more than just the salaried or hourly pay as well! Don’t forget about things like bonuses, overtime, or other forms of pay your employees may receive throughout the year.
Don’t forget about paid time off! The time that your company offers an employee as PTO has a value. While this is often included as part of their regular earnings, it’s still valuable to show employees the dollar amount that encompasses their PTO.
Every company offers a unique benefit package. The most common offerings include insurance (such as medical, dental, vision, life, & disability) and retirement. Many of our clients also offer a variety of other benefits such as employee assistance programs, tuition reimbursement, daycare allowances, or recognition awards.
When creating a summary of your benefits, it’s important to comb through all options to show a complete picture of your compensation package.
Your company also pays into federal and state programs such as Social Security, Medicare, Unemployment, and Workers’ Compensation. While it might not seem like a benefit, these programs provide a safety net for employees in a vulnerable position. It can be beneficial to show your contributions towards the employees’ future security.
How do you calculate total compensation? Put it all in a spreadsheet and let us do the hard work! We’ll input all the data into a custom, individualized statement for each employee based on their unique elections. Additionally, we’ll calculate the totals so that it’s easy to see exactly where an employees’ benefits are distributed. We can then mail out the statements or ship them directly to you! It’s that easy!
To make it even easier for you to collect your benefits, we’ve created a handy BENEFITS CHECKLIST to help you list the various offerings that you should show on your statements!