Most employees do not fully understand the costs associated with their employment. While many of these are the cost of doing business, employers that offer more generous benefits packages might want to shine a light on the extent of those benefits. Some payroll systems as well as some third party providers have the ability to provide total compensation statements.
Prior to jumping into distributing these statements, employers should be aware of the potential pitfalls. The old saying that “No good deed goes unpunished” can hold true when it comes to these statements. Employees could look at the statements as just a justification for not handing out raises. Because of this, you might want to time this after raises or merit based increases have been awarded.
Employees may also look at some of the benefits that are listed that have a value applied to them and determine that those are meaningless because they don’t use them. To avoid this employers may want to customize the statements to each individual and just include the “core” compensation items that are universal across all employees and leave a separate section to highlight other potential forms of compensation.
Lastly, you obviously need to make sure the statements is done correctly. Any errors can create painful discussions with employees. On the plus side, for those employers offering a generous retirement or health benefit to employees, it helps visualize the cost to the employer to do so and also why their salary today is actually more than that prospective employer is dangling out there because of those additional forms of “soft” compensation that employees may not readily identify with. In today’s hyper-competitive job market, employers need to make sure that employees are valuing all that is being offered to them.