Total Reward Statements Might be a Joke.
The other day I was sitting with someone who just got their Total Rewards Statement. “It’s such a joke” he said, “We were all laughing at the stuff on the page. FICA taxes? Why would they take credit for taxes? I guess they’re trying to make the number look as big as possible, right?”
It was clear these statements were met with skepticism. And I don’t think that’s uncommon when it comes to Total Rewards Statements. As an employee, it’s naturally to question a document that suggests you’re making $100k when you know your salary and bonus is only $70k, and yet you seem to only have $35k of disposable income to live on. You’re skeptical. You don’t want to be fed some bogus story on a piece of paper that you’re actually being paid $100k when you know you’re not.
Here’s the issue. Cash compensation, such as salaries and bonuses, generally only make up 70% ($70k above) of the cost of employment. The other 30% ($30k, for a total of $100k above) is provided as retirement contributions, health insurance, ancillary benefits, payroll taxes, etc. The employer knows it does actually cost $100k to pay someone a $70k salary. As an employer, you hope your employees have a true understanding of the full investment you’re pouring into them! You want them to know and appreciate that the benefits you provide, the culture you have, and the intangibles you offer are better than your talent competitor down the street!
So, Employer, how do we help your employees understand your investment in them without getting a few chuckles and skeptical comments?
Well, I was just spit-balling on that same topic, so let me know throw some thoughts out there.
What if we turned that reactive end-of-year-look-back Total Rewards Statement into a proactive beginning-of-year-look-ahead Total Rewards Opportunity Statement? What if we focused on those elements of your organization that truly differentiate your employment brand and employment value proposition, rather than trying to get credit for every penny spent…like FICA taxes and unemployment insurance? What if we show the value of those financial opportunities (company contributions & match in 401(k)/HSA) not only in today’s dollars, but also as of the employee’s potential retirement age? What if you, or a trusted third party advisor, sat down with your employees to help them understand their Opportunity Statement and optimize their benefit elections and financial decisions so that they could increase their take-home value now and/or in the future? What if you added a review of one’s Opportunity Statement to the wellness program you already have in place, making it one possibility to earn the financial incentives of your wellness program? Or what if you had a mechanism to at least reach out talk directly to those employees that are not optimizing their rewards opportunities like wellness incentives, matching contributions, free gym memberships or EAP programs?
Think about all the value employees receive but don’t understand. Think about all the value that employees are leaving on the table.
Opportunity Statements may be one way to flip the script, but that’s just the beginning. Let’s figure it out!