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?

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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.

How Much Does Salary Matter?

How much of a bump in salary would it take to get you to accept a new job?

While everyone’s number is different, it’s clear that salary matters. A recent article points out that lack of meaningful wage growth is one of the main reasons workers switch jobs.

But wages are only part of the story.

The same article notes that engaged employees are far less likely to jump ship for a job with higher pay. Recent research finds that among employees who are “fully engaged,” 37% would consider switching jobs for a raise of 20% or less – compared to 54% of employees who are “actively disengaged.”

Employers can take a few lessons from this and similar studies –

Pay matters – up to a point: Employees need to be paid competitively, but also need to feel connected to their work and the organization for reasons that go beyond the paycheck.

Benefits matter – and not just traditional benefits: As with cash compensation, employees expect a certain baseline when it comes to benefits, but beyond the basics such as health insurance and retirement benefits, employers should be looking at other benefits – such as financial wellness and opportunities for education and professional development -  that employees consistently say that they value.

Communicate: Make sure that employees are fully aware of the total rewards package the organization provides. Total compensation statements are an excellent tool to use to increase employee awareness and appreciation of the breadth and depth of an organization’s rewards programs. 

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.