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Show employees what their total rewards entail

A number of human resources executives are struggling to make their pay-for-performance systems relevant to employees – especially when budgets for merit pay are still struggling to be fully funded. In lieu of meaningful performance pay, organizations are seeking new ways to affect employee outcomes. One alternative may be a new emphasis on total rewards instead of focused attention on direct compensation or benefits.

Total rewards should be designed to create a compelling employment “deal” to attract and retain talent. However, even if an organization has worked hard to develop the most compelling total compensation package it can for its workforce, employees won’t understand and appreciate the value if an organization fails to communicate and reinforce it.

This lack of understanding is proving to be a common issue for many organizations. A survey from Charlton Consulting Group found only 19 percent of employees completely understand the total dollar value of benefits they receive, which could partially be explained by the failure of organizations to measure the level of employee understanding. Only 37 percent of employers actually have metrics in place to measure the effectiveness of their total rewards strategy, according to a Buck Consultants survey.

There is a solution for helping employees understand the true value of their total compensation and, in turn, feel more appreciation for the rewards they receive. Organizations can educate their workforce using highly effective tools such as personalized total compensation statements. Such statements can be produced on paper or online. The most effective formats include not only wages, but also the actual cost of all benefits. For example, they can include the employer portion of Social Security and Medicare payments, the company’s portion of insurance premiums, and the value of paid days off.

The comparison communicates the compelling “hidden paycheck” that employees receive without even realizing it. Some companies also take advantage of the statements to provide information about career paths and opportunities for growth and development.

This comprehensive approach to total compensation communication is a great way to optimize the value of the rewards you provide currently without adding the expense of additional programs. When tied to performance indicators, it also creates a clear line of sight so employees understand how their accomplishments contribute toward the company’s overall success.

With organizations investing so much in actual compensation and benefits, it just makes sense to help employees understand the full value of what they receive. This is especially true when you consider that as the economy improves and hiring begins, your employees will begin to have options about whether to stay with you or be courted by a competitor.

The personalized total compensation statement answers the question that drives each of us at our most basic instincts: “What’s in it for me?” It helps your employees feel valued by building a relationship of trust around total rewards, which enhances their commitment to your company.


Michelle Hicks, a senior professional in human resources, is a director in the communication practice of Buck Consultants, a Xerox company. 

About Michelle Hicks