Tackling the War on Talent

How Communicating Employees’ Hidden Paycheck Could Help Set You Apart

Insight By
Michael LoVasco
Topic
Employee Benefits

As employers move toward restoring stability and learning to function post pandemic, employee attraction, engagement, and retention are more critical than ever to an organization’s success. This is precisely why there is a renewed interest in making sure employees understand and appreciate the true value of how their organization invests in them. One of the most powerful ways to convey this is through personalized Total Rewards statements.

What is a Total Rewards Statement?

Historically, personalized statements were limited to sharing forms of direct compensation an employee received— such as base pay, incentive pay, overtime, and bonuses. More recently, however, employers have recognized there are many other benefits and rewards employees don’t realize they are receiving.  

Total Reward Statements communicate the overall value of an employee’s total compensation package, by going beyond direct compensation to including indirect compensation, benefits, and other rewards. All components are given a monetary value (typically the employer’s investment) to show the employee the true value of their employment package. This additional value is often referred to as the employees’ hidden paycheck.  

Examples of Common Elements Found In Total Reward Statements

Direct and Indirect Compensation
  • Base Pay
  • Bonus
  • Incentive Pay
  • Overtime
  • Shift Differentials
  • Other Special Forms of Pay
Health and Wellness Benefits
  • Medical/Rx
  • Health Savings Accounts
  • Dental
  • Vision
  • Flexible Spending Accounts
  • Wellness Programs/Incentives
  • COVID-19 Relief Assistance
Income Protection Benefits
  • Disability
  • Life Insurance
  • Voluntary Benefits
Financial Wellness and Retirement Benefits
  • Pension
  • 401(k) or 403(b)
  • 457 Plans
  • SERPs
  • Financial Counseling
PTO and Leave Benefits
  • Paid Time Off
  • Medical Leave
  • Personal Leave
  • Jury Duty
  • Bereavement
Career Advancement
  • Tuition Assistance
  • Training and credentialing
Government Benefits and Other Perks
  • Worker's Compensation
  • Social Security
  • Employee Discounts
  • Allowances

Advantages of Total Rewards Statements

A growing number of employers are turning to Total Reward statements for the following reasons:

  1. Strengthen Loyalty/Boost Retention.
    Studies conclude that most employees underestimate the value of their total compensation. Employees are tempted to leave their employer for a minor increase in pay, while not appreciating how much their benefits and other rewards are actually worth.  A Total Rewards statement serves as a critical “eye-opener” — allowing them to clearly see how much money your company is truly spending on them. For example, employees may be surprised to learn how much health benefits, life insurance, paid leave, and other components are worth. Seeing the magnitude of their employer’s investment can in turn increase their appreciation, commitment, and loyalty.
  1. Improve Morale and Productivity.
    Everyone likes to feel valued and appreciated for their contributions to an organization— especially after having gone through such a traumatic year. A personalized Total Rewards statement is a “feel good” piece that shows employees that your organization takes care of them beyond a paycheck. This leaves your employees feeling supported and valued by your organization.
  1. Increase Benefit Engagement and Drive Participation.
    Total Rewards Statements are an excellent tool for highlighting the value of benefits an employee may be missing out on. For example, you can include personalized retirement projections to show non-participants in the 401k plan how much they are potentially missing by not contributing to the 401k plan. Or, encourage current participants to raise their contribution levels. Include projections that show how much a participant could stand to gain at age 55, 60 and 65 if they were to bump up their contribution by 2%, 4% or 6%.    
  1. Improve Ability to Attract Talent.  
    While recruitment brochures are important, offering candidates a generic statement based on the Total Rewards of the average employee is a powerful way of demonstrating the true value and investment the company makes in its employees.  

Whether your challenge is employee retention or attracting talented job candidates for hard-to-fill positions, the level of personalization in Total Reward Statements may be the competitive advantage you need – making a significant impact on how your company is portrayed in the minds of today’s workforce.

Insight By
Michael LoVasco
Executive Vice President
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Not applicable

Topic
Employee Benefits
Published on

August 2, 2021

updated on

July 21, 2021

Disclosure

This article is for educational purposes only. The tax and legal references attached herein are designed to provide accurate and authoritative information with regard to the subject matter covered and are provided with the understanding that LoVasco Consulting Group is not engaged in rendering tax or legal services. If tax or legal advice is required, you should consult your accountant or attorney. LoVasco Consulting Group does not replace those advisors.

Securities and Investment Advisory Services offered through M Holdings Securities, Inc., a registered broker dealer and Investment Advisor, member FINRA / SIPC. LoVasco Consulting Group is independently owned and operated.

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