total compensation

It Pays to Ask . . .

Those millennials are at it again, changing yet another aspect of workplace culture. This time, according to a recent article in the Wall Street Journal, it’s all about pay transparency.

According to the article, “roughly a third of U.S. workers ages 18 to 36 say they feel comfortable discussing pay with their co-workers.”

This brings some new challenges to employers since, traditionally, employees were reluctant to talk about pay, particularly with co-workers. Employers will need to think about how evolving norms should impact decisions about compensation. Employers that lack clear guidelines around salary decisions could come under pressure to clearly explain why, for example, two employees who perform similar work are paid different amounts.

But employers should also see the change as an opportunity. Employers who understand more about their pay and benefits are more engaged employees.

Employers Are Paying More for Benefits. But Do Employees Know?

Photo by pe-art/iStock / Getty Images
Photo by pe-art/iStock / Getty Images

A new study finds that the cost of employer-provided benefits increased 24% from 2001 to 2015.

The analysis conducted by WillisTowersWatson revealed not only an overall increase in the cost of employee benefits, but also a shift in how employer dollars are allocated - less for retirement benefits and more for health insurance.

The fact that the cost of employee benefits has increased to the extent that it has will not come as a surprise to employers. Employees, however, are a different story. For most employees the main concern of the past fifteen years or so is not the increase in their employers’ cost of benefits but rather the lack of wage growth experienced by many workers. Simply put, most employees are unaware of the value of their total compensation package.

While many employers strive to communicate a total rewards message to employees by providing them with total compensation statements, too many employers fail to make communicating this key information a priority. By failing to communicate, employers miss an opportunity to maximize the return on the significant investment being made in compensation and benefits.

Does your organization provide a total rewards statement to employees? Let us know in the comments. And, of course, feel free to reach out to discuss how we help you tell your organization’s total rewards story.

Give Yourself a Raise During Open Enrollment

As open enrollment season approaches, employees should keep in mind that, while the annual rite of making changes to employee benefits can be a bit of a chore, it's also an opportunity to boost your total compensation.

Benefits often make up at least one-third of most employees’ total compensation packages, so making sure to take full advantage of the benefits that are available is critical.

One of the easiest places to find “free money” is to contribute to your 401(k) or other workplace savings plan at least enough to get the full employer match. Contributing less means that you’re leaving money on the table – money that can be used to build a nest egg for the future.

Of course, there are other areas to pay attention to – checking carefully to make sure you are choosing the optimum level of health insurance, taking advantage of opportunities to purchase life and disability insurance, etc. The key is remembering that benefits are a significant part of what makes up your total rewards package – and in order to maximize those rewards, be sure to choose wisely during open enrollment.

Expanding the Definition of Total Rewards

Anisha Archary, the Human Resources Director of Old Mutual Emerging Markets, published an excellent blog post over the weekend that describes her organization's view of total rewards. It's an expansive, comprehensive view that other employers should take note of.

In her post, she outlines a broad idea of how to define total compensation. Total compensation should be, in her words:

a multi-dimensional employee value proposition, which includes culture, leadership development, talent management, community work and an opportunity to develop a career. For us, benefits are more than monetary reward. We know that money is important to employees, but also understand that people work for more than money. 

In other words, cash compensation and traditional benefits are of course extremely important, but there are many other aspects of the overall workplace experience that are critical for employee engagement and retention. 

5 Reasons You Need a Total Compensation Statement

Moving into Q4, organizations are thinking ahead to 2016. For many organizations, total compensation statements are high on the to-do list.

Why should your organization be thinking about producing a total compensation statement? There are many reasons, of course, but here are our top five:

  1. Employees don't value what they don't know -- Multiple studies and surveys over the years have found that employees consistently undervalue their total rewards package. A total compensation statement clearly shows employees the true level of investment being made by an employer.
  2. Increase the ROI of compensation and benefits -- By laying out the full details of each employee's total rewards package, a total compensation statement increases the odds that the benefits and compensation you provide to employees will be effective in driving employee satisfaction and engagement.
  3. Increase employee retention -- Employee turnover is expensive. According to one recent survey, almost half of workers agreed that a well communicated total compensation program would make them less likely to leave their current employer.
  4. Reinforce the employee value proposition -- Employees - particularly high performing employees - have choices and options. Total compensation statements are an extremely cost effective way to make sure that employees understand the many advantages of committing to your organization.
  5. Build your employer brand - Total rewards communications help reinforce other communications and initiatives that, taken together, increase the brand value of the organization as an employer.