Employee Compensation May Appear To Be Less Than Reality. Employee acquisition is an expensive process for staff at all levels of any organization. The best method for managing the cost of talent acquisition is by keeping your experienced employees as long as those employees continue to perform at a high level. Planned turnover within an organization is healthy. Unplanned turnover in any organization is a drain on valuable resources of any organization, including human capital, financial resources and time.
Factors that impact Employee Turnover
It is not unusual for employees to feel that they should be paid more than they are making today. An employee can easily look at their paycheck and feel they are worth more, or substantially more. What is unusual is for an employee to understand their Total Compensation Package. The Total Compensation from any company is normally 25 to 33% greater than the number reflected on an employee’s pay-stub statement. In addition to the paycheck, Total Compensation includes company-paid health care premiums, 401k contributions, disability insurance, life insurance, and required government benefits.
During a recent Fiduciary Training Program held at Rutgers University, Fred Barstein, Founder and CEO of The Plan Sponsor University (TPSU) interviewed a program attendee on the topic of communicating the Total Benefits Package to the employee-base. The interviewee is the Vice Presidents of Human Resources at a 200 employee service organization.
Strategy for Communicating Total Benefits to Employees
This particular service organization prepares and distributes an annual Compensation Notice to every employee. The company then goes the extra mile by communicating to employees an estimate of “what each employee has failed to take advantage of” by not participating in the 401k Plan and other employer-paid company benefits. The company then calculates the lifetime lost opportunity for each employee and communicates that number in front of each employee.
The Hourly or Bi-weekly paycheck is one part of the compensation story. Additional company paid benefits is the next chapter on Total Compensation. And, finally, the projection of the lifetime lost opportunity is the final chapter. That is a strong Communication strategy that sends a clear message to company employees.
Most Fortune 500 companies do provide a Total Benefits Statement annually but many smaller companies fail to take advantage of such communication.
