Certainly most employees realize that their employment comes at an additional cost to their employer beyond their direct pay (base pay and/or incentive pay). However, they may not realize that employers are providing them with thousands of dollars in additional benefits, both mandated and voluntary. Providing employees with a total compensation statement is a valuable tool that employers can use to showcase the total value they are receiving in benefits and compensation. The more detail that the statement provides, the more valuable it becomes.
What to include
Some common items to include in a total compensation statement are:
- Direct compensation – salary, commission, overtime and bonus
- Medical benefits coverage – include amount paid by employee and employer
- Paid time off – vacation, holiday, sick leave, jury service, and other leave
- Mandated benefits – workers compensation, state disability insurance, Social Security, Medicare, FUTA and SUTA tax
- Disability insurance
- Life insurance
- Employee assistance program
- Retirement benefits – include 401(k)/403(b), pension plans, etc
- Educational assistance programs
- Relocation expenses
Benefits to your business
Your business benefits when an employee understands that their total compensation adds up to considerably more than the number they see in their paychecks. Employees that are given the nitty gritty breakdown of their pay and benefits are probably going to feel more fulfilled at work due to their higher-than-realized pay. This can result in increased self-esteem, a higher appreciation of management and the company in general, and an overall more engaged and loyal employee.
Contact your HR Consultant if you are an ESC client and would like us to prepare these statements for you to distribute to your employees.