Simply put, a Total Compensation Statement is a document that itemizes the investment an employer makes in their employees. It is a statement of the “hidden paycheck” that an employee doesn’t necessarily see on a check stub every pay period. It is the culmination of wages and benefits neatly and creatively communicated to demonstrate the organization’s commitment to their employees. The question that remains is: Are they necessary? In this article we explore what a total compensation statement is, why a company should offer them to their employees, and who should offer a total compensation statement.
Traditionally , a total compensation statement only highlights lines of pay that make up an employee’s salary or wages. A total rewards statement annualizes the amount paid towards an employee’s benefits and elections that are offered by the organization. It is now a common practice, and the most effective, to develop a communication piece that encompasses both types of statements in order to give employers and employees alike a full picture of one’s compensation. Because of this, total compensation statement and total rewards statement can be used synonymously. Other effective components of a total compensation statement are simple charts and graphs that show a breakdown of how much an employer contributes to each type of benefit (i.e. health insurance, life insurance, retirement, etc.) and/or how much of one’s compensation is strictly salary vs employer paid benefits. Deciding what and how to show these elemental pieces of a statement is crucial to capturing an employee’s attention.
Employees frequently focus on the deductions coming from their paycheck, but often fail to realize the brunt of the cost is absorbed by their employer. Showing a side by side comparison gives perspective to the investment organizations make towards the well-being of their employees. Offering a total compensation statement also allows employees to compare how their compensation package measures up to the market. Overall, total compensation statements improve employee engagement, retention, and gives a greater appreciation for the value of their employer paid benefits.
Organizations who often feel the pressure of high turnover and struggle with employee retention based on dissatisfaction with their pay should consider offering total compensation statements to shine light on the true value in their total rewards. Benefits and rewards are part of the top 5 reasons candidates either apply for a position or leave an organization. Having competitive pay and benefit packages is crucial to hiring and retaining talent. Utilizing total compensation statements gives employers a platform to highlight those benefits. Total compensation statements enable employees to think beyond the dollar and cents of their paycheck. An employee can refer to this document and see the total cost of their benefits, the amount they contribute, and the amount their organization pays, all in one place. It has the potential to increase employee engagement which ultimately affects productivity.
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