As an employer, you know exactly how much each of your employees costs the company. You know the dollar value of their salaries, bonuses, overtime pay, health benefits, and other types of compensation.
While you’re very familiar with this information, your employees probably don’t know it. Of course, they know how much their salaries are. These are easily determined by glancing at paycheques. The other aspects of compensation are much harder for employees to figure out on their own. Your employees could be in the dark about how much they cost your company, and how much they mean to you.
Understanding Total Compensation
Total compensation refers to all the monetary and non-monetary ways you reward your employees for their hard work. It includes those obvious types of compensation, like salaries and bonuses. It also includes health benefits, including life insurance and other types of insurance.
Total compensation could also include those extras you like to provide, like relocation benefits, wellness programs, or an employee assistance program.
Why Employees Must Understand Total Compensation
Right now, your employees may not know how much they’re costing your company. Many types of compensation aren’t visible. For example, employees probably know they have health benefits coverage but may have no idea how much it actually costs. They could think health benefits aren’t very expensive; of course, as an employer, you know that’s not the case.
By showing your employees the value of their total compensation, you can show them how valuable they are. Employees who’d been feeling undervalued or underappreciated could realize they were mistaken. They could learn that they’re well-compensated by your company after all.
Showing your employees how valuable they really are can help strengthen the relationship between them and your company, too. Employees could feel more loyal to your company once they know how much you appreciate them. Thanks to this loyalty, they could feel more engaged at work. Highly engaged employees care about their jobs and want to perform well.
Businesses Benefit from Well-Communicated Compensation
Employees benefit from well-communicated compensation, but businesses benefit, too. A major advantage for your company is increased morale. No one likes feeling like they’re underpaid or undervalued, and in companies with poorly communicated compensation, that’s how employees could feel. If you clearly explain total compensation to employees, they’ll know they’re being paid fairly, and morale may improve.
High employee morale has many positive effects for businesses, while low morale has the opposite effect. Employees with high morale miss less work, have fewer conflicts with their coworkers, and make fewer errors. They’re also more enthusiastic, more committed, and more involved during meetings. Employees with high morale will perform at a higher velocity and help you strengthen your business.
Well-communicated communication can help you attract more great employees, too. When current employees think they’re well-valued, word gets around. Your company can gain a reputation for paying employees well, and that could lure highly talented candidates to your company.
How to Communicate Total Compensation to Employees
Communicating total compensation to employees is much easier than you might think. You already know the dollar value of every benefit you provide to your employees. Now, you just need to show your employees those numbers. You can provide employees with lists of their various types of compensation, as well as how much each type costs.
While you could create these statements manually, it’s much faster and easier to create them with your human resource information system. With a few clicks of a button, you can show employees the details of their total compensation. Make sure to explain the statements to your employees and answer any questions they have about their compensation.
You value your employees; it’s time to let them know how much. To show employees how much they mean to your company, you can create total compensation statements.