<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=277773366320008&amp;ev=PageView&amp;noscript=1">

Subscribe to Email Updates

Text Size

- +

Do your employees know how much their compensation package is worth, and what they need to do to increase their compensation? If you haven’t been transparent about total compensation, they probably don’t. Employees may think their salaries are the only compensation they’re receiving. After all, salaries are well-communicated. Employees get reminded of their salaries every time they receive their paycheques. The other aspects of their compensation are harder for employees to see.

Download our free guide to find out how small businesses are saving time and  money on HR admin.

To show your employees how much they’re really being paid, use your HRIS to create total compensation statements. By creating these statements, employees will get a clear idea of how much their paid leave, insurance, health benefits, retirement benefits, and other types of compensation are worth. Make sure to include performance-based benefits, too. But, why is it important for employees to know this information? Here’s why HR managers need to be transparent about total compensation.

To Improve Employee Morale

No one likes feeling underpaid. If your employees think their salaries are their only compensation, they may be feeling underpaid and underappreciated. They don’t know how much the company is spending on other types of compensation, like health benefits. They may not even be aware that those benefits are part of their compensation.

Poor employee morale can have negative effects on businesses. When employees have low morale, they show up late for work, and they miss more work. They make more errors, and they need to spend time re-doing work. Employees with low morale have more conflicts with their coworkers.

By being transparent about compensation, you can show employees how much they’re really being paid. Transparency links directly to the overall value an organization places in an employee.

To Decrease Turnover

When employees feel like they’re not being paid fairly, they may start looking for work elsewhere. Your talented employees may end up quitting and going to work for your competitors. While your competitors may not really pay better, they may advertise their compensation more effectively.

Turnover can be very expensive for companies. One of the more eye-opening HR statistics is that turnover can cost 30 to 50 percent of an entry-level position’s annual salary, according to ERE Media/Talent Management. The cost of training and onboarding, as well as decreased productivity as new hires get up to speed, contributes to this expense.

To Motivate Employees

One of the goals of your compensation plan should be to motivate employees. When your compensation plan is well-communicated and transparent, employees know what they need to do to get rewarded—and work harder to do so. Ensuring performance-based benefits are correctly weighted in the bonus/base structure can motivate the right behaviour.

By being transparent, you can motivate employees to work harder. Employees will clearly see the value of their performance-based benefits, like bonuses. If they want to earn more of those benefits, you can tell them what they need to do to improve.

To Attract Top Employees

Every company wants to attract top employees, but many small businesses have trouble finding them. You need top talent to compete with other companies in the market. Transparency can provide you with an ability to reposition or market your compensation more competitively.

Good employees have options in the job market. They can look for companies that provide attractive total compensation packages. If your compensation package isn’t transparent, candidates may pass over your company. They may apply to other companies that are more open about their compensation.

To be transparent, you can add information about total compensation, not just salaries, to your job ads. You can also discuss all aspects of compensation with candidates in job interviews. If you don’t discuss compensation with candidates, you could lose them to more transparent companies.


Linda Woolley

Linda Woolley

Linda is the founder of Nortek Solutions Inc. She has been developing, marketing, and delivering enterprise-wide business applications for over three decades. Linda has strong insight into the HR technology market and current trends and is highly proficient in the technologies underlying today’s web applications. As founder and leader of High Line Data Systems Inc.—which later became High Line Corporation— she built a comprehensive HR, payroll, and financial product line that was successfully marketed across North America. Linda founded Nortek Solutions Inc. in 2000; under her leadership, Nortek has provided high quality consulting and development services to numerous organizations across North America, specializing in HR, payroll and financial systems. With the introduction of Nortek’s cloud-based people management solutions, Linda has positioned Nortek to become a leading vendor in the HR technology market. Linda loves all forms of art, dancing, theatre, listening to music while working, the office dog, and her own pets.

Find Linda Woolley on: