Help Your Employees Appreciate Your Investment in Them

"Total compensation statements" have been around for many years and are widely used by large employers. But they have become more accessible to smaller employers thanks to their availability online. The concept is simply to attach a dollar sign, where possible, to all the elements of compensation -- or even the entire "work experience," if you want to take it this far. Doing so may preclude a valued employee from jumping ship for a higher salary, only to realize that he's actually taking a pay cut when factoring in varying employer contributions to health and retirement benefits, among other items.

If the value of salary/wages, commissions and bonuses and basic employee benefits were added up, the benefits portion typically falls between 30 and 40 percent of the total. Add in vacation time, statutory benefits and various programs you may be offering employees, and the total can easily exceed 40 percent.
Pulling together all those numbers can be pain-free if you have a basic human resources information system (HRIS). If not, you may need to do some number-crunching. Once you have those numbers, you can plug them into a customizable template via a web-based service and pay as little as $1 per statement.

Defining Compensation
How expansive should you be? The value of paid time off is certainly an element of compensation that can be easily translated into dollars, and included in the statement. This can include holidays which are above and beyond the basic vacation package.
As noted, some employers also list statutory required benefits including your contribution to employees' Social Security and Medicare benefits and unemployment benefits. While you have no choice in the matter, it's useful for employees to understand this element of your investment in them.
You can also throw in the value of traditional wellness and "financial wellness" benefits, if you offer them. Professional training is yet another important benefit to include, with travel expense reimbursement if the training takes place at a distant location.
A typical statement will feature a grid showing what you contribute to each element of compensation, and what the employee contributes. The employer-paid elements are toted up and identified as total compensation (see chart at bottom). Statements can feature a pie chart to provide a strong visual representation of the relative size of the different components of compensation. These statements can also be used to recap highlights of your benefit programs.

Presenting to Employees
How should this information be presented to employees? Ideally, in a sit-down conversation between the employee and supervisor (or you), to highlight the importance of employees' understanding what you are investing in them, and why.
A good time to do that is in conjunction with an employee review. If, for example, raises were not given out to many employees at that time, or only very modest ones, the benefit statement might reveal the total compensation rose by a greater percentage than the salary or wage component if, for example, your share of the employee's health benefits took a big jump. This would be worth highlighting, of course.
Another approach is to present the statement following the benefits enrollment period, if the effective date of the new benefit elections doesn't coincide with the employee's salary review cycle.
Some employers like to mail statements to married employees' homes, in the hope it will increase the chances the employee will share it with his or her spouse. The assumption is, the spouse will react positively to the numbers. Otherwise, this tactic could backfire. Mailed statements should be accompanied by a letter from you, or have a message from you incorporated into the statement.
The most impersonal statement format, yet perhaps appropriate for some employers -- assuming they have the right information systems in place -- is to have those numbers in the employee's private area of a portal, updated automatically as dollar values change.
A Google search under "total comprehensive statements" will identify several companies which provide the service. You can scan those websites both for price and customizable statement examples.

Acme Corp. Total Compensation    Provided Exclusively for John Smith    Compensation Element   Your Contribution    Acme's Contribution  Salary    $          50,000 Bonus if goals achieved    $            5,000 Health benefits  $          1,800  $            6,000 Health savings account  $            500  $            1,000 Dental plan  $            250  $            4,000 Vision plan  $            300  $            2,500 401(k) deferral  $          7,000   401(k) match    $            3,500 401(k) profit sharing contribution    $            2,000 Paid time off (vacation, sick days, holidays, etc.)*    $            5,000 Life insurance  $            500  $               500 Long-term disability    $               500 Short-term disability    $               600 Educational assistance & training    $            2,000 Wellness program    $               500 Financial education program    $               300 Employee assistance program    $               350 Social Security and Medicare    $            3,812 Workers' compensation    $               175    $        10,350   Non-salary contribution    $          37,737 Non-salary contribution as a percent of total compensation   43% Total compensation    $            87,737       * Based on daily value of salary @ 2,000 hours/year + $200 x 25  -- 15 vacation days, 5 holidays and 5 additional days off. Value would be $7,150 if based on total compensation.