Total comp statements combine real-time power with old-school communication
There was so much anticipation surrounding Sedgwicks first-ever total compensation statements that about half of the third-party administrators more than 11,000 full-time and part-time employees viewed them the day they were released in 2014.
What is different about our statement and sets us apart is that we do a projection going forward from the current year saying this is what you will probably get if you stay with Sedgwick for the entire year, says Tricia Enyart, VP of compensation and benefits for Sedgwick, noting that bonuses and overtime pay are not included in that mix.
Shes also grateful for the chance to monetize and highlight a generous paid-time-off program of 20 vacation or sick days plus holidays to show the workforce that theres a lot of money that they earn when theyre not even working.
The statements, which were mailed to all employees except for about 50 temps, include a brief description and monetary value of base salary, bonus and commissions, as well as health and welfare benefits, retirement savings, voluntary benefits, PTO and any other company-provided programs.
Burnishing the value proposition
Total comp statements represent a powerful conduit to assemble at the very least the financial components of the overall value proposition that an employer is providing to employees, according to Brad Wolfsen, SVP for bswift, a vendor of cloud-based technology and services for employee benefits and health exchanges that produces total comp statements for employers.
And while employees are paying relatively more for their benefits than in the past, he says these statements allow them to view incentives that cannot be calculated in a straight-forward manner so that its relevant and simple for them to understand. As a result, they can develop a much better appreciation for the full value of their total-rewards package.
Total comp statements have vastly improved over the years, according to Bruce Elliott, manager of compensation and benefits for the Society for Human Resource Management. Not only are they now more comprehensive than ever before, but he also notes that the advent of real-time ERP/HRIS platforms such as OracleHR/PeopleSoft and SAP updates to total reward statements are much more current than they used to be.
With an increasing reliance on smartphones, everybody expects things in real time, and they want to find out about their benefits right away, observes Karen Venson, client relationship manager for bswift.
The move away from paper-based communications to more of a real-time calculation mirrors the online banking trend. I dont think anyone looks at their [bank] statement anymore, Wolfsen says. They want real-time information about their balances. Total compensation statements have to meet the same expectation.
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This is evident at MedAmerica Financial Services, Inc., which is poised to roll out a new-and-improved total comp statement to about 2,000 of its 4,500 employees. Katrina Tange, the companys senior benefits manager, is enthused about the inclusion of a candidate portal that bswift developed allowing prospective new hires to model their full compensation for an instant comparison to their current job. That is a huge recruiting, she says.
Brief and to the point
A shift in thinking about total comp statements now favors a more visual and relevant presentation that also values brevity over including too many details, observes Mike Kloss, a communications consultant at Aon Hewitt. He says theres also a mix of paper-based and online formats that are turning a long-time annual event into a yearlong, real-time process that appeals to legions of millennials who are entering the job market.
But having said that, Kloss believes paper is still king for such a high-level form of employee communication. Online usage is a lot lower than people realize, he explains, and I think one of the [reasons] we see a resurgence of print, even with total compensation statements, is the fact that youve got to get people out there.
This means its more important than ever not to rush through statements to meet certain timelines. You dont want to sacrifice quality for speed, Kloss cautions, noting the all-important commitment to accuracy.
Total comp statements are a tremendous tool for promoting transparency in compensation, so its important that you assemble the data rigorously where youre modeling the price of something and what the model is that youre using, according to Wolfsen.
Not a fit for everyone
Despite their value, total comp statements may not work for everyone at least until a meaningful strategy can be formulated and in cases where most of the workforce is part-time or seasonal, adjustments may need to be made if theyre deemed necessary enough.
One such organization is Regis Corporation, whose workforce consists of mostly part-time hairstylists who work in salons and do not qualify for health benefits and instead are focused on their pay and work environment.
Drew Fesler, the companys AVP of HR, says its important to first determine a business objective associated with total comp statements before offering them. Since the value of this strategy is unclear to Regis, there have been no investments made in the technology, process or capabilities to present uniformed comp statements.
The biggest obstacles right now involve updating antiquated systems as well as targeting a workforce that consists of disparate segments. Fesler believes companies that are more homogenous benefit from the ease and simplicity of applying different types of philosophies to comp and benefits, and other aspects of rewards and recognition, to their entire population.
Roughly 17,000 of 50,000 Regis employees are eligible for health benefits, but if total comp statements are offered at some point, Fesler says theyd probably go to the entire workforce. Although its being discussed, such a move is still considered a low priority relative to other initiatives.
Another key determination in deciding on a total comp statement would be to craft compelling messages for employees. It could be increased awareness of the complete offering or a way to market underutilized aspects that may require additional uptake or interest, Fesler explains. Certainly, theres a heightened interest to be much more forthcoming in consolidating information about what employees are earning and what they receive.
More bang for the buck
Fesler has seen the benefits and compensation function evolve to accommodate a broader view of rewards and recognition, such as learning and development, as well as how the organization is providing a complete employment deal for employees.
Elliott says the value of adopting a total-rewards strategy is that HR departments are able to achieve a significantly bigger bang for the companys buck. Theres a tendency for employees to fixate on base salary and relatively small pay increases, but when you add in bonuses and employer-provided subsidies on benefits, he observes, the increase to total rewards can, and usually is, much more substantial than the 3% increase that the employee sees in their salary.
Another key development is the emergence of creative campaigns that periodically focus on different aspects of the total-rewards approach. So maybe one quarter, its tied to the compensation area, he notes. The next quarter might focus on wellness ahead of enrollment. In the next quarter, theres a big push for career development.
MedAmericas Tange says employees dont really know the cost of their medical care, so when they see the employer portion thats paid, I think that will be huge. Another part of the proverbial hidden paycheck that shes enthusiastic about revealing is a generous 11.2% retirement savings match as well as any forfeited matches on the first 6% of contributions.
Sedgwicks senior leadership had long sought a total rewards approach to benefits and comp. A 2013 change in benefit administrators led to the creation of Sedgwicks first total comp statements. Enyart says the aim was to ensure that employees could do apples-to-apples comparisons of their entire benefits and pay package if they were thinking about leaving the company or if someone made them an offer. So from a retention perspective, we think its a valuable tool, she adds.
From a recruiting perspective, Kloss believes total comp statements can make all the difference in keeping top talent from going down the street for an extra $1,000 for the wrong reasons. If they knew some of the benefits and value that some of the organizations have out there compared to their competitors, I think that theres going to be an even bigger need for these things in the coming years as the economy starts to pick up.
Of course, there are caveats to consider when embarking on total comp statements. For example, Elliott suggests that self-insured plan sponsors steer clear from adding claims paid by the company on behalf of the employee. The reason: privacy and HIPAA issues. He says its better to provide actual numbers, and not annualized figures, that reconcile with an employees W-2.
He also recommends that these statements be simple to understand and read with a pie chart that shows the ratio of base to bonus to benefits as it relates to total compensation.
With all the time and effort that total comp statements require, its critical for employers to make sure the presentation is compelling. Otherwise, as Venson suggests, theres a good chance that no one will read the statements, and therefore, employees will miss a tremendous opportunity to know and appreciate the full value of their benefits and compensation.
Bruce Shutan is a Los Angeles-based freelance writer.