The Value of Total Compensation Statements
In many cases employees don’t pay much attention to how much their employers are paying out for benefits. Often, the only thing that catches their attention are the COBRA rates AFTER they have left the company. Total Compensation Statements are rising in popularity as a means to communicate the contributions above and beyond wages employers make to employees. These expenses can include health insurance premium contributions, health savings accounts or FSA contributions, Life Insurance, STD/LTD, PTO, 401(k) matching, stock options, auto allowances, tuition reimbursement, and employer paid taxes.
The reason Total Compensation Statements are gaining popularity is largely due to the advancements in HR Technology. Many newer payroll systems are integrated with robust HRIS systems. It makes it easier for employers to compile this data easily because it is all contained in one system as opposed to multiple spreadsheets or paper files. In fact, many HRIS systems can support dynamic total compensation statements that update with each processed payroll. If an employer utilizes a self-service approach, employees can see this statement on their own on-demand.
Total Compensation Statements serve as a powerful retention tool for employees to understand the true worth of their employment. This is especially true for lower compensated employees who may leave an employer for a few thousand more dollars elsewhere. If they can easily understand their current benefits, the decision to leave may be avoided. It can benefit higher compensated populations if vesting schedules for retirement benefits or stock options are easily communicated as well. Many employers try to communicate this information to employees at least once a year, either at annual reviews or open enrollment. If an employer can save a few employees from turning over each year by providing Total Compensation Statements, it is well worth the cost of doing it.
