When used correctly, employee total compensation statements can help eliminate potential pay issues, increase workforce morale and enhance productivity.

Compensation – or the lack of it – is one of the biggest causes of low workforce morale and decreased productivity. Just one unhappy employee venting their grievance to colleagues can create a general feeling of dissatisfaction that permeates throughout a workforce – no matter how unjustified the grievance is.

When the grievance relates to the lack of a traditional raise, or a smaller raise than usual, there is a straightforward way to overcome the grievance – by correcting using employee total compensation statements to communicate the value the business places on the employee in a meaningful way.

Employee total compensation statements should show employees how much the business is investing in them – not only week by week or month by month, but in comparison to how much was invested in them in the previous year. In this way, employees can see that their total pay and benefits are increasing at a higher rate than they imagined – eliminating potential pay issues and creating a more motivated workforce.

What to Include in an Employee Total Compensation Statement

Has the business had to pay more for employees´ health insurance this year? Have employees received extra paid time off? Has the amount contributed to employee retirement funds increased since last year? Probably all three, but unless businesses make employees aware of these increases, they will remain in the dark. Other items businesses should consider (where applicable) include:

  • Any paid leave for personal time off, sick leave or vacation.
  • Each employer-paid portion of insurance plan premiums should be listed separately.
  • The business´s contribution to a retirement plan, such as a 401(k) or pension.
  • Employee use of a company vehicle and associated costs such as maintenance.
  • The value of any Employee Assistance Program on a per-employee basis.
  • Tuition assistance or training courses paid for by the business.
  • Home office benefits such as Internet use or cell phone service.
  • Per Diem payments when travelling, paid for public transportation and parking.
  • Other benefits such as fitness club memberships, on-site child care, and company-sponsored discounts.

How businesses present an employee total compensation statement is just as important as the items listed on it. It is okay to surface enhancements in a manner that informs employees of the value of benefits they receive, but not as an attempt to divert focus from a lack of straight pay increases. It can also help the communication of the message if a letter is enclosed detailing how employees can use the benefits being provided for them.

How to Avoid Issues over Compensation Statements

Naturally, employees will compare compensation statements in the same way as they compare paychecks, so it is important that employee total compensation statements are accurate and do not “double count” – for example, counting paid leave on top of salary when the amount received by the employee in pay and benefits does not exceed the base salary.

Other issues where sensitivity is required include advising an employee who uses public transportation that he or she has benefitted from a parking discount, or including health insurance payments for an employee not yet eligible to take advantage of a health insurance plan. As you can see, employers should be careful when presenting this information. While employee total compensation statements have the potential to be useful tools, they also have the potential to have the opposite effect.