Do Your Employees Know What You Really Pay Them?

Too often it seems that employees (and employers!) undervalue the “Total Compensation” package. While we should not minimize the value of base pay (salary or hourly), the EctoHR team believes strongly in communicating the entire scope of pay and benefits that a Company provides to its staff.

With clients ranging from 2 to 800 employees, EctoHR sees the full gamut of pay and benefits packages. Some of our clients are clearly pay leaders, offering base salaries and bonuses that exceed the 90th percentile within their industry. (For information on how we know this, see the article on our latest partnership with Payscale). In other cases, the benefits package is the key driver, with health, dental, and family-friendly leave policies making the Company attractive. In a few cases, money and benefits are not important factors at all (hard to believe, we know), but rather job fulfillment, incredible work place flexibility, and industry niche really create the draw for talent.

When it comes to actual pay and hard benefits, EctoHR strongly encourages its client to provide annual “Total Compensation” Statements. Ideally, these reports are customized to individual employees and are communicated to staff at the same time that W2’s go out in Mid-to-late January. Experience shows that employees rarely consider the entire package when reflecting on their current job and providing them with a total compensation report helps reinforce how much the Company invests in the employee and values his or her contribution.

If you are looking to put together a fairly straight forward Total Compensation report for your employees, we recommend including the items below.

  • 1. Pay for Time worked - Regular pay, including O/T (shown as a gross wages in $)
  • 2. Paid Time Off (vacation, sick, etc)
  • 3. Bonuses/Commissions/Other (performance pay)
  • 4. FICA – Social Security Contribution
  • 5. FICA – Medicare Contribution
  • 6. Health Insurance premiums paid by the employer
  • 7. Dental/Vision/Other insurance premiums paid by the employer (if applicable)
  • 8. 401K match or other contribution by employer (if applicable)
  • 9. Other retirement/defined contribution plan (if applicable)
  • 10. Vehicle allowance (only if above and beyond business specific mileage reimbursements)
  • 11. Professional development costs or tuition reimbursements
  • 12. Other items that can be quantified (not fluff!)

If possible, here are a few other things to consider with total compensation statements:

  • • Showing the “non-pay” portion of total compensation as part of a pie graph verse the pay portion. Or simply listing a ratio of benefits versus pay.
  • • List other soft benefits of working with your Company, including free lunches, coffee, casual attire, Company parties and social events, etc.
  • • See if your payroll system can export the data so you can do a mail merge and not have to recreate each file manually!

For specific recommendations on what to include in your 2011 Total Compensation Statements, contact us at 810.534.0170.