If you ask your employees how much they’re paid, they’ll probably tell you their salaries. While salaries are a big part of compensation, they’re not the whole story. As a business owner, you know how much money you’re spending on health and dental insurance, life insurance, paid time off, wellness programs, and other parts of your compensation package. Your employees don’t know how much all those components are worth. If you don’t tell them, there’s no way for them to find out.
Communicating total rewards to employees is simple. With today’s HR technology, businesses can create total rewards statements automatically. These statements give employees a breakdown of the various aspects of their individual compensation packages, as well as the dollar value of each benefit.
If you’ve never talked about total rewards with your employees before, you may be wondering why you should start. Here’s why it’s so important to communicate total rewards to your employees.
To Help Employees Feel Valued
If employees think their salaries are their only compensation, they may feel underpaid. Your employees could feel discouraged. Of course, they aren’t actually underpaid. You’re spending a lot of money on those hidden aspects of compensation, like health benefits.
Communicating total rewards to employees helps them understand the real value of all the compensation your company provides. When they learn how much health benefits and other types of compensation are worth, employees may realize they’re paid much more than they thought they were. Employees who’d previously felt underpaid could realize they’re receiving competitive compensation and are valued by your company.
To Motivate Employees to Succeed
As a business owner, you offer various types of incentive pay to encourage employees to do their best work. By communicating total rewards, you can raise awareness of the performance-based pay that’s available to employees. If employees know what bonuses and commissions they can potentially earn, they can work harder to earn more.
Total rewards statements can also show employees the value of the incentive pay they’ve earned in the past. Employees may not keep track of the bonuses and commissions they earn from one paycheque to another. Seeing the total of the incentive pay in one place can show employees how hard they’ve worked and encourage them to continue doing what they’re doing.
To Improve Retention
People leave jobs for many reasons, but insufficient pay is the number-one cause, according to Monster. Employees don’t have to be underpaid to leave; they just need to think they are. By clearly communicating total rewards to your employees, you can show them they’re being well-paid. This gives them less reason to look for work elsewhere.
Giving employees a clear idea of their total rewards also helps them evaluate competitors’ offers accurately. Instead of just comparing salaries, they can compare the entire compensation package. If your competitors are offering higher salaries, but lower-valued benefits, employees would be taking a pay cut if they leave. These employees could decide to stay with your company.
To Attract Good Employees
Every company needs good employees to stay competitive in the market. With the right employees, you can strengthen your business. High-performing employees exceed the goals you set for them and encourage their coworkers to excel. Low performers could have the opposite effect.
It’s not always easy to find top talent, but communicating total rewards to your current employees can help. If your employees are happy with your compensation package, word will get around. A reputation for competitive compensation helps you lure top talent to your company.
There are many good reasons to talk about total rewards with your employees. To get started, use your human resource information system (HRIS) to create customized total rewards statements for your employees. Discuss the details of the statements with each employee, and answer any questions they have.