Salary isn’t the only type of compensation your employees receive. In addition to their salaries, your employees may receive health and dental benefits, paid leave, and retirement benefits. They may have access to employer-provided insurance, like life insurance or disability insurance. Some companies provide more unusual rewards, like tuition reimbursement. Total compensation refers to the sum of all these extras and your employees’ salaries.
Some employers are now providing total rewards statements to show employees the value of all their compensation. These statements can be easily created with your human resource information system (HRIS) and distributed to your employees.
For businesses, there are many reasons to create these statements.
To Help Employees Understand Their Compensation
As a business owner, you know exactly how much you’re spending on your employees’ compensation. For employees, it’s harder to know this information. Employees see the highly visible parts of their compensation, like their salaries. Every time your employees receive paycheques, they get a reminder of the salaries they’re receiving.
Other types of compensation are much less visible. Your employees probably know they have access to a health benefits plan, but there’s no way for them to know how much it’s worth if you don’t tell them. The same is true for other types of compensation, like life insurance or disability insurance. By providing total rewards statements, you can clearly show your employees the dollar value of their various types of compensation.
To Improve Employee Morale
When your employees receive total rewards statements, they can clearly see how much money your company is spending on them. They may be surprised to learn how much health benefits, life insurance, paid leave, and other components are worth. Employees who’d previously felt underpaid may realize they were being well-compensated all along.
Being underpaid—or feeling underpaid—is a cause of job dissatisfaction. By showing your employees the real value of their compensation packages, you can boost morale. Increased morale is good for your business since happy employees are more productive and miss less work.
To Retain Your Employees
Insufficient pay or unfair pay practices are the top reasons why employees resign, according to the employment website Monster.com. Employees who don’t know the value of their total compensation could feel like they’re being paid unfairly, even if they’re being paid competitively.
With total rewards statements, you can show your employees the truth about their compensation. This communication can help you improve retention in your company since employees who feel fairly compensated have less incentive to look for new jobs.
Lower turnover is good for businesses. When you retain your employees, you don’t need to go through the time or expense of recruiting new ones. Your company can remain at peak productivity since you don’t need to wait for new hires to get up to speed.
To Attract New Talent
Helping your current employees understand their compensation can also help your company attract new talent. When companies offer great benefits, word gets around. These companies develop reputations for appreciating their employees and paying them well. Developing this reputation can encourage top candidates to apply for open positions at your company.
With the right employees, your company can become more competitive. This will help you continue to grow your company and remain successful.
With today’s human resource technology, it’s easier than ever to produce total rewards statements for your employees. These statements help your employees understand their compensation, which boosts morale, reduces turnover, and even helps you attract new talent. With these advantages, it’s no wonder companies are turning to compensation management to power their growth.