• Most employees underestimate the value of their total reward and compensation
• Employers lose money on unused benefits due to unawareness
• Showing employees their true value leads to greater transparency and trust
• Total Reward Statements provide employees with a complete overview of their entire reward package
• Awareness of total reward leads to greater appreciation, retention and can be used as a powerful tool in recruitment efforts
When thinking about their compensation, it’s common for employees to only think about their take-home salary. However, salary is only part of the picture and, as a result, employees are likely to be significantly underestimating the actual value of their rewards package.
Today, we see employees demanding transparency from employers. This is great news for both parties as it creates awareness of total compensation for the employee and provides employers with an opportunity to show employees the true value of their investment.
As explained in the article Using Technology to Meet Employee Demand for Transparency, employees who work for organizations that are more transparent have a greater trust in management, are more committed to the organization and are more connected to the employer brand.
So, what’s the best way to make employees aware of their total compensation? A Total Reward Statement.
What Information Does a Total Reward Statement Include?
In addition to an employee’s basic salary, a Total Reward Statement calculates, assembles and visualizes the total value of an employee’s compensation package. This can include:
- Employee Benefits
- Insurances
- Pensions
- Tax and fiscal contributions
- Bonuses
- Vacation and sick pay
- Childcare
- Meal subsidies
- Public transport compensation
- Parking space
- Flu vaccinations
- Wellness programs (e.g. gym memberships)
Total Reward Statements can be presented as a printed document or digitized and made accessible via an employee portal or benefits administration system.
What’s more, employers can enable employees to access their digital Total Reward Statement via an app on their smartphone or tablet, so that employees can review their total reward anywhere, anytime.
Using a Total Reward Statement encourages transparency, which assists organizations with:
Retention
If employees are unaware of their total value, there’s the risk they leave to work where they believe the grass is greener and where they think will be better compensated. However, when presented with a Total Reward Statement, employees can see every part of their compensation package. This transparency helps support retention.
Trust
Transparency and fairness around compensation helps build trust, which leads to employees feeling more connected to their employer, thus more likely to become a positive ambassador for the company.
Awareness and Understanding
Every employee seeks to be compensated fairly. Total reward statements are an effective way to create awareness of compensation and provide clarity around any questions or concerns about an employee’s reward package.
Before introducing Total Reward Statements, Niels Kater, HR Analytics & Application Management Specialist at Adecco, shares that creating employee awareness of total compensation was a challenge. “It was hard for us to make employees aware that it’s not just about their base salary, but their secondary payment, and the total combined,” Niels explains.
Today, after introducing Total Reward Statements via their employee portal, Adecco employees have a greater awareness and understanding of their total compensation. “The portal is the starting point for all our HR processes. We incorporated our benefits budgets and reward statements so that it would give employees a better understanding of their working conditions at Adecco”, Niels shares.
Additionally, awareness leads to greater benefits appreciation and usage, which saves money on otherwise unused and wasted benefits.
Recruitment
Transparency around compensation is a powerful tool for attracting and recruiting new talent. Candidates can see the value of your offer and make an informed decision. If you are confident about your benefits offering and total compensation package, this is a wonderful opportunity to showcase it.
By visualizing your organization’s total rewards strategy during recruitment exercises, onboarding processes or performance reviews, you will succeed in building a strong employer brand, making you a more attractive employer. It’s a win-win.
Transparency and awareness of total compensation help contribute to a positive employee experience. If you’re interested in learning more about creating an outstanding employee experience, be sure to download our e-book, The New Employee Experience: How to maximise and optimise every step of the employee journey.