What Should Be Included in a Total Compensation Statement
Using total compensation statements is one of the best ways to show your employees how much you value them. But determining what benefits to include in a total compensation statement is a big challenge for most of the employers with whom I’ve spoken. The main problem stems from the fact that they fail to realize that providing a written document with all the benefits and perks they offer can help them not only attract and retain top-performing employees, but also boost efficiency and productivity due to a happier workforce.
What Should You Include in a Total Compensation Statement?
Over the past few years, most organizations have increased the value and variety of non-wage benefits. To ensure that your employees notice the efforts you’ve made, I recommend that you include all the benefits you provide in the total compensation statement. At minimum, the statement should comprise the following elements:
- Employee compensation – This type of compensation refers to all forms of payment an employee benefits from, including wages, commissions, overtime pay, and incentives.
- Insurance benefits – Insurance benefits should provide information regarding employer-paid insurance, including health insurance and health care spending account, dental insurance, vision insurance, short- and long-term disability, life insurance, and business travel accident insurance.
- Retirement benefits – Social Security, Medicare, and Retirement Plan (401K) should also be included in total compensation statements. Under federal law, employers must pay a 1.45 Medicare tax on all earning and a 6.2 percent Social Security tax on earnings up to $117,000 for their employees.
- Mandated benefits – Mandated benefits mainly refer to worker’s compensation, federal unemployment insurance and state unemployment insurance. While worker’s compensation provides compensation to employees who suffer work-related illnesses and injuries, unemployment insurance benefits are meant to cover temporary wage replacement to employees who become unemployed through no fault of their own.
- Leave benefits – A total compensation statement should also reflect leave benefits, such as holidays, vacation, sick leave, bereavement, and jury leave. Whether paid, unpaid, or partially paid, leave benefits allow workers to take time off from work for different reasons. Although most employers offer employees certain types of leave (e.g., federal holidays, vacation, and sick leave), they can also provide voluntary incentives, including rest periods, performance-based vacations, and so on.
- Special benefits: If transportation, education/training, technology assistance, meals, childcare programs, parking, uniform expenses, holiday bonuses, health club membership and other incentives are part of the “hidden” perks you make available to employees, I suggest that you incorporate them in total compensation statements.
By giving your employees the chance to see that their compensation benefits include much more than the amount written on their paychecks (which by the way they only see as “net”), you actually show them how much you care. This will help you build employee morale and turn your staff into a more productive workforce, because they feel more appreciated and respected by you).
You’ve probably worked very hard to offer your employees a competitive compensation package. Now, if they seem uncertain about how much their benefits are worth, it’s time to consider COMPackage. Why? Because our compensation reporting software delivers one of the most convenient ways to design, develop, and deliver total compensation statements, helping you address a key aspect of your employee attraction and retention strategy: communication – all at a fraction of what consulting companies and outsourced solutions cost. Being transparent about the benefits and perks you offer can help you to motivate your employees not only to work hard and well, but also to stay loyal for years to come.