If you ask your employees how much they’re compensated, they’ll probably think you’re talking about their salaries. This is no surprise since salary is the most visible part of total compensation. It’s hard to miss the numbers on a paycheque. Other aspects of compensation aren’t as visible.
As a business owner, it can be frustrating to spend time and money offering a compensation package that no one seems to appreciate. Your employee health benefits, life insurance, pension plan, paid sick and personal days, and other benefits can cost a lot of money.
Business owners want to get their money’s worth on compensation. To do this, take the time to help your employees understand the compensation they’re receiving. Here’s why it’s a smart move to help your employees understand their total compensation.
Improve Employee Morale
Did you know underpayment is one of the main causes of job dissatisfaction? Of course, your employees aren’t actually being underpaid. However, if they don’t understand their compensation, they’ll feel underpaid. Thinking you’re underpaid isn’t a good feeling, and employees may feel unappreciated and upset.
When you help your employees understand their compensation, they’ll realize how much you’re actually spending on them. This knowledge helps employees feel well-paid and appreciated. They’ll feel happier about their jobs, and morale will improve.
Improved morale isn’t just good for your employees; it’s good for your business. Employees with low morale miss more work, make more errors, and get into conflicts with their coworkers. With high employee morale, your business can be more productive.
When employees feel like they’re being underpaid, they’ll start looking for work elsewhere. While your competitors may not offer higher compensation, they may advertise it better. Your best employees may take jobs with your competitors.
As a business owner, you already know turnover is expensive and a hassle. When you can retain your existing employees, you don’t need to put your regular tasks on hold to focus on recruitment.
Attract Good Employees
Every business owner wants to attract good employees. With good employees, your business will become more competitive. On the other hand, if the good employees go to your competitors, you’ll have trouble growing your business.
If your company becomes known for offering a good total compensation package, it will be easier for you to recruit top employees. Top employees have a lot of options in the labour market, and they don’t need to settle for jobs with poor—or poorly communicated—compensation. This is why you can power your company’s growth with compensation management.
How to Talk about Compensation
The benefits of helping employees understand total compensation are clear. But what’s the best way to talk about compensation? Ideally, compensation should be an ongoing topic of discussion. If you only talk about compensation once, your employees may forget important details. They may not understand all aspects of their compensation.
Your job ads are the first place to start talking about total compensation. In your ads, list the key aspects of your total compensation package. Interviews are another opportunity to talk about compensation with candidates. Once you’ve hired employees, the on-boarding process gives you yet another chance to reinforce knowledge of compensation. Compensation can be discussed during enrolment periods, performance reviews, meetings, and other times when you see a natural opening for the conversation.
The easiest way to show employees how much their compensation is worth is by presenting total compensation statements. These statements give employees a breakdown of all the benefits they’re receiving and the dollar value for each benefit. When you use a human resource information system, it’s easy to quickly create these statements.