Archive for the ‘Total Compensation’ Category
by Joe Blattner | November 24, 2011
If you’re like most business owners or HR Managers, you know that communicating with employees about their salary and benefits is always a touchy subject. It’s best to plan accordingly and ensure that the timing is appropriate. But when is a good time to tell employees what their salary, health benefits, sick time, vacation time, and countless other perks are worth? Well, the answer is…it depends.
There are several different occasions and times of the year when your organization may be best suited for giving employees their total compensation reports. Given that a detailed summary of employee benefits is a boost to morale, the Holiday Season or New Year can be a great time to give employees the gift of a complete rewards statement. Although an annual benefits report is sometimes adequate, there are many other times throughout the year when a total compensation statement can help attract, retain, and positively impact your employees.
Hiring
First impressions are always important, and the way you welcome a new employee to your company is no exception. That’s why hiring can be an excellent time to present a total compensation statement. Letting a new or potential employee know just what you’re prepared to provide, even beyond their regular salary, is a great way to get that new relationship off to a solid start. In addition, employees who are comparing other offers can fully see what your company is offering them, and if the competition doesn’t provide a total compensation statement, your company is going to be viewed as the better choice.
Promotions or Raises
Another good time to discuss benefits is during a promotion or request for a promotion. Oftentimes in such discussions, the focus is solely on the actual wages offered or sought. However, it is wise to also emphasize the other benefits an employee is receiving outside their paycheck, such as paid sick time, free parking, a laptop, cell phone, or several other perks. Even intangibles like flexible scheduling can and should be part of the discussion, since they contribute to the overall employee welfare, contentment, and productivity.
Reviews
Annual or semi-annual performance reviews are also an excellent time to bring up total compensation. While discussing what the employee has done for the company, you can also showcase the full dimensions of what your company is providing. A comprehensive total compensation statement can boost morale and employee loyalty, and makes an excellent accompaniment to any words of encouragement that you may offer during a review.
Significant Life Events
There are some events in life that have a direct correlation to employee benefits. Occasions such as marriage or divorce, starting a family, illness or approaching retirement can be opportune times to present a total compensation statement. Since an employee may become eligible for additional benefits at these times, taking the initiative to let them know what they qualify for and what they receive is a great way to show that you’re truly looking out for your team.
Remember, the full measure of benefits your employees receive far exceeds their actual wages. This is good news, so share it freely!
by Joe Blattner | May 12, 2011
According to the most recent MetLife Study of Employee Benefits Trends, 56% of employers surveyed made no modification to employee benefits materials last year. This means, even though there may have been changes in employee costs and benefits, those changes were not communicated to employees.
Not only that, but the study also says that only 23% of employees are satisfied with their benefits communication. So, of the employers who DO send out benefits communications, 77% must not be doing a very good job of it!
But, why should an employer give a hoot? Because employees who get communications from their employer about their benefits are twice as loyal to that employer. TWICE as loyal. That thought alone ought to save you some costs in employee retention and recruitment.
How often do you update your employee benefits communications? And, just as important, when was the last time you explained to your employees how much their total compensation is worth?
When fifty-five percent of employees report that they do not find their benefits materials clear or comprehensive, clearly an opportunity exists. This is where you can help your employees understand their compensation and further engage them, so they may see for themselves how much your company provides.
*Source: MetLife 9th Annual Study of Employee Benefits Trends
Part of your benefits communications should also be showing the COSTS associated with employee benefits. Do your employees know how much they’re benefits cost? Do they see the rise in costs every year in workers compensation, state insurance, health care? Do employees realize that the extra three days off they were given this year in vacation pay is actually costing the employer money by not having that employee at their job? This is also part of their total compensation.
The more communication you can provide to your employees, the better they will understand your company. In fact, you will also understand your company better if you were to add up all the costs that go into an employee’s total compensation. COMPackage total benefit statements provide over 60 benefit costs that most employers don’t even consider when adding up the costs of their employees. By adding up all of these costs, businesses are better equipped to make good decisions.
Would love to know your thoughts about this topic — how has employee benefits communication strengthened your relationship with your employer/employees?
by Joe Blattner | April 20, 2011
That’s just over 43% of pay!
According to the Bureau of Labor and Statistics, employer-paid benefits make up a big chunk of change – 30.3% of total compensation for employees across all industries and sectors.
The BLS study shows that private industry employer costs for paid leave benefits averaged $1.89 per hour worked, while legally required benefits was $2.28 per hour worked. Take a look at the study to compare the compensation costs for state and local government workers, private industry workers, and civilian workers.
COMPackage believes that the proportion of employer-paid benefits is actually higher than 30.3% for many industries, because the BLS study is not taking into account all possible benefits, such as travel expenses, training, company outings, free suburban parking, cell phone expenses, etc. COMPackage has always believed that employer-paid benefits as a percentage of base pay is 43%, which is what the BLS percentage of Total Compensation number equates to. But we also believe that when you add these above benefits that the BLS wouldn’t typically include, then average definable benefits are actually even more, especially for companies employing higher salaried workers!
Included in the amount accounted for by the BLS were employer costs for vacations, holidays, sick leave, and personal leave. Other costs included legally required benefits, including workers’ compensation, (1.5% of total compensation); state unemployment insurance, (0.7%); and federal unemployment insurance, (0.1%).
This study is important for a couple of reasons:
a)It shows whether there is a rise or fall in how much employers are paying for total benefits of employees. (There was an increase of nearly 3% over the last three years.)
b)It points out that employer-paid benefits make up a tremendous portion of employees’ total compensation, a point that is often not communicated to employees, even though it is a very substantial amount of their pay.
When the total costs of employee benefits, like insurance, health care, and paid-time off, go unreported, how can employees possibly decipher their true compensation? If employees can only attach a number to their salary, and do not understand their total worth to the company, both parties suffer unrealistic expectations. Employers feel like they’re paying employees too much, while employees feel like they’re being paid too little. Neither party is wrong, but without knowing and reporting on how much the actual costs are, neither party has a leg to stand on, whether negotiating salaries or finding ways to retain employees.
When was the last time you took a hard look at the numbers you’re spending on your employees? And if you are already using total compensation reporting methods, what types of benefits are you including in your total compensation reports?
by Joe Blattner | March 31, 2011
Today, the ideal total compensation package is as diverse as the current workforce itself. In fact, it has to be in order for companies to attract and retain the absolute best employees.
Your employees may vary greatly in age, location (urban, suburban, rural), gender, and marital status. They also most likely vary in how they work – from home or at the office? From a computer or by phone or some other type of a machine? By travelling on sales calls or going into the office every day? These are all things to take into consideration. Not to mention, employees working for the same companies have very different job descriptions and skill sets. Why give all employees the same exact benefit package, when employees are all so different?
If you are trying to provide a one-for-all solution, you are more than likely leaving some of your employees behind. By taking the demographics of your workforce into consideration, you can remove the guesswork of a one-handed solution and offer employees a worthwhile benefits package with options.
Regardless of whether or not your company is small or large or somewhere in between, tailoring benefits to the specific needs of your employees does wonders for morale. It’s also a smart move if you aren’t able to compensate monetarily as much as your competition. To bridge the salary gap, the savviest of employers know they must make up the difference by offering an attractive total compensation package and one that make sense for the employees in question.
Think about it. Would you offer an on-site daycare facility as a part of your benefits package if a large portion of your workforce is under the age of 25? If most of your employees commute by bus, would including a parking spot be relevant or even necessary? If you have telecommuters working for you maybe they don’t get to enjoy the “complimentary” coffee you keep in steady stream in the office – why not offer your virtual assistant a monthly $10 gift card to a local cafe?
Another example would be if employees are expected to use their own vehicles for company business, a prepaid gas card would help to defray fuel expenses. Do employees work from home using their own equipment and Internet service? If so, you might want to consider providing laptops with Internet access.
The cost of providing employees with potentially expensive perks such as insurance, holiday bonuses, company cars, laptops, cell phone service, tuition reimbursement, or stock options may naturally be a great concern, but it may not be as high as factoring in the cost of recruiting and retraining new hires. Offsetting salaries with a diverse selection of fringe benefits is one of the simplest ways of compensating employees smartly.
In essence, offering a diversified benefits package gives you the luxury of not only attracting talent, but also keeping the top talent in your field happy to be on board. Providing options and showing individualized attention can be priceless. And with the right software, it doesn’t have to be difficult, either. COMPackage offers customers a comprehensive list of over 60 benefit ideas as a natural part of their total compensation software subscription.
Getting the Word Out
After revamping benefits packages to meet the unique and changing needs of your employees, it is imperative to then ensure they are fully aware of their total compensation. It is often astounding for employees to find out how much their employer pays for their total compensation, but sometimes it’s also a shock to the employer, when they start adding it all up.
Many employees are completely unaware of the extent or contents of their work benefits. Are key employees being lured away and accepting other positions offering a higher base salary? They may not be so quick to make a move if they had all the facts about their benefits package.
Employees and potential recruits need to know the full costs associated with having them on staff. Knowing this gives them a better idea of their true compensation and it also allows for essential employee feedback. Encouraging employees to provide feedback regarding which types of compensation are most important to them gives you a definitive edge when it comes to yet another important aspect of any successful business – employee retention.
But how can you give them all of this information without spending a ridiculous amount of time compiling data or an exorbitant amount of money outsourcing the task to a third party?
The answer is using total compensation statement software for creating employee compensation reports and detailed benefits statements. Benefits statements will give your employees a clear and concise picture conveying exactly how much they are really being compensated for their services.
What interesting ways does your company provide benefits? We would love to hear your ideas for diversifying benefits in the comments below.
by Joe Blattner | February 21, 2011
One of the toughest decisions small business owners have to make is how much to pay their employees. Too little and they risk high turnover and low morale; too much, and they’ll never get ahead financially. Calculating salaries is a tightrope walk that few new employers feel comfortable with. Do you know if your salaries are competitive?
Use the right tools
Fortunately, there are a number of readily available tools at your disposal to help you calculate the ideal salary for each employee in your company. It’s important that you use all the resources you can, because your employees are almost certainly already using them, and they know exactly how much they should be making. Start with free tools from the Bureau of Labor statistics like their Consumer Price Index and Employment and Wage Surveys to get a rough idea of the cost of living in your area and average salaries for employees in your industry. For more detailed information, consider using a salary calculator from a site like Salary.com.
Allocate funds
When deciding on compensation for each employee in your company, one of the things you’ll want to consider is which positions you’ll want to offer the most competitive compensation. For example, if you’re hiring for a position known for high turnover, you may not want to offer as competitive a salary as you would for an employee with many responsibilities who would be difficult to replace.
Compensate with benefits
If you can’t offer the same high salaries as other employers in your industry, consider making up the difference with benefits. Certain benefits like free parking may not cost you a whole lot, but could make a world of difference to an employee comparing your offer to another. Show employees and recruits how much their benefits are worth through a total compensation report. Compensation reports clearly and concisely show how your benefits bridge the gap between your offer and the seemingly higher salary at another company.
by Joe Blattner | November 8, 2010
Today, a simple online search will turn up a number of companies claiming to offer you the best solution for producing total compensation statements. While some of these solutions offer a few nice features, many lack the basic functionality required to produce a truly useful total compensation statement. When you’re considering total compensation statement software, use this checklist to make sure it has the features that matter most to you.
Is Total Compensation Statement Software Easy to Use?
You don’t have the time, money or Computer Science degree necessary to effectively use many compensation statement solutions. To get the best return on your investment, take a close look at a couple different solutions and choose the one that is easiest to understand while still offering robust features. Most compensation software solutions will provide a demo or a sample — make sure you look closely at each and compare the products before making a purchase.
How Much Can I Customize Employee Benefit Statements?
You should be able to customize as much as you want. Simple, “free” software for creating reports may not be flexible enough to provide real value to employers. Make sure the solution you choose allows you create custom reports for every employee in your company; otherwise, your incomplete statements could end up doing more harm than good.
How Secure Is It to Use Total Compensation Statement Software?
If you can’t verify that a total compensation statement software is 100% secure, then you need to move on immediately. You don’t need the headache of dealing with leaked employee information due to insecure online software.
Does the Software Include Pre-Loaded Benefit Ideas?
Pre-loaded benefit fields in a software solution can help you remember that you not only offer 401(k) and dental insurance, but also benefits like free parking, tuition reimbursement and weekly lunches. These more obscure perks can really add up and make a huge difference to your employees.
Can I Quickly Upload Data Using Compensation Reporting Software?
If you run a medium to large business, you may be dreading the task of entering information on every single employee into a reporting program. If you run a larger company, look for total compensation statement software that allows you to import data directly from an Excel file.
by Joe Blattner | October 11, 2010
While economists are happy to report that the economy is looking up, your balance sheets tell you differently. Your business is in a slump and has been for several quarters now. You know that you need to make cuts somewhere, but where?
While employee benefits and incentives are crucial to a productive, happy workforce, sometimes they need to be trimmed to balance the budget. When you have to make the hard decision to cut incentives during a tough economic time, follow the tips in this guide to minimize impact on employees and recover as quickly as possible when the economy rebounds.
- Don’t fool yourself. Take a hard look at your finances and make a realistic decision about what you need to cut. Many companies start out by cutting out too little, ensuring a slow, painful death for the company.
- Be transparent. By showing your employees your financial situation and inviting feedback, you can help people understand why some of their benefits need to be cut.
- Make cuts from the least necessary benefits to the most necessary. While health and retirement benefits may make up most of your compensation package, your employees would probably agree that these are the most important benefits they see. Before you go after incentives that people depend on, try to cut out things that aren’t absolutely necessary like company parties, vehicle usage and education reimbursement.
- Start cuts at the top. Your management team probably enjoys the most benefits anyways, and when your employees see that their management has already made real sacrifices, they’ll be less likely to complain when they are asked to do the same.
- Reinstate benefits when the economy rebounds. Many times, when a company cuts matching 401(k) contributions or raises health insurance premiums, those benefits never come back. If you reinstate benefits as soon as your company gets healthy again, you’ll be able to show your employees just how valuable they are to you.
It is important to remember that we often tell our employees when we cut their benefits, but we rarely tell them what all of their benefits mean to them.
You can quickly and easily share with your employees how much their benefits are actually worth at any moment through total compensation statements. View a sample statement to learn more.
by Joe Blattner | September 23, 2010
Employee turnover costs are hard to pin down. Many employers don’t have the time to calculate their exact costs for replacing a worker since they the cost seems to be minimal and unavoidable. The truth is, however, that HR experts estimate that the cost of replacing one employee is at least 25 percent of that employee’s annual salary. These costs include:
Separation Costs
- Cost of exit interview
- Increase in unemployment tax
- Separation pay
- Administrative costs
Replacement Costs
- Placing job ads
- Cost of employees’ time for interviewing process
- Background check cost
- Bonuses and administrative costs
Training Costs
- Cost of training material
- Cost of trainers time
- Time it takes new employee to ramp up
Intangible costs also include the stress a short staff puts on other workers, interrupted client dialogue and lost company knowledge. If you add it all up, you are probably losing much more than you thought on each employee that leaves your company, so doesn’t it make sense to start doing something about it?
The solution to reducing turnover is different for every company. The most important thing you need to do is find out exactly why employees are not happy with your company and fix it. Are employees overworked? Do they hate the work environment? Do they want more competitive salary and benefits? You may not see a dramatic change within a couple weeks or even months, but whatever money you invest in your employees in the short term, you’ll see multiplied in the long term with reduced turnover and higher profits.
Effectively communicating to employees through employee benefit statements can help reduce turnover, as well. Ensuring employees are aware of the company costs associated with keeping them at the job can play a significant role in whether or not the DO stay at the job.
Would love to hear your thoughts and experiences on the costs associated with employee turnover in the comments below!
by Joe Blattner | July 12, 2010
Whether you are a small company trying to improve your employees’ current benefits or you’re shopping for insurance for the first time, there’s no better time to buy health insurance than now. Thanks to the passage of the healthcare bill through Congress, companies with up to 24 workers and an average wage of up to $50,000 are eligible for hefty tax credits if they sign up for employee health insurance.
Unfortunately, many small companies find shopping for health insurance to be a traumatic experience. When employees learn about the new plan, there is always complaining about switching doctors, the cost of the insurance and services that are excluded. While there will always be some dissatisfaction, you can make the process go much smoother by involving your employees from the beginning.
A quick, anonymous survey through a website like SurveyMonkey can help you gauge your employees’ interest in health insurance features. The more detailed your survey, the better idea you’ll have of what your plan should look like.
- How happy are you with your current health insurance situation?
- What features would you change in the current healthcare plan?
- Which healthcare features are most important to you?
- Are you more worried about regular or emergency costs?
- How important are prescription costs to you?
- Many services like optical care are excluded from some health insurance plans. Which services would you like to see in your plan?
- How much would you mind changing your current doctor if it meant a reduction in premiums?
After you narrow your selection down to a few options, have your designated insurance broker come to your office on company time to meet with employees. Health insurance can be confusing, and a meeting with an expert can answer many employee questions and relieve fears before your office gets overwhelmed with confused employees.
After you choose a health insurance plan, show your employees how much it is worth through COMpackage’s Total Compensation Statements.
by Joe Blattner | June 29, 2010
Show your employees that you appreciate them by sponsoring an outing either during or after work. These outings don’t have to break your budget, but, as many employers have discovered throughout the years, they can be extremely useful for building camaraderie and improving morale.
We’ve assembled a list of 20 creative ideas for employee outings. Feel free to add onto this list by asking your employees for suggestions and considering even the most outrageous ideas.
Team contests
It doesn’t matter what the contest is as long as you follow one rule – everyone participates. These contests should be activities that everyone in your company can enjoy, regardless of athletic skill level.
- Wii tournament
- Karaoke contest
- Scavenger hunt
- Recess games
- Laser tag
Community Service Projects
Community service activities not only draw your employees together, they also allow your company to give back to your community.
- Sponsor a work team in a charity walk or race
- Plant trees or clean up a neighborhood
- Split the company into two teams and see who can raise the most money for a charity
- Let employees choose the service project, then use a Friday to complete the project as a company
Sports
Sports have the ability to draw people together in ways that few other activities can. Consider sports activities that may interest even those who don’t necessarily like athletics.
- Sponsor a company sports team
- Sponsor a company “fitness club”
- Leave work early to attend a daytime baseball game
- Volleyball, softball or basketball tournament
- Miniature golf
- Bowling
Get Togethers
If you’re looking for a more laid back activity, consider an informal get together. Through these gatherings, your employees can meet each other’s families.
- Movie night
- Family picnic
- Informal happy hour
- Tailgate in the parking lot
- Holiday themed party
You can choose to show your employees how much benefits like employee outings, company cell phone usage and suburban office free parking are worth through a total compensation statements.
