Human Resources and Benefits

Total Compensation Statements


Though you may be offering an array of benefits for your employees, the key to getting employees to actively use these benefits and understand the value you are providing is through an effective communications program.

  • Communicate your benefits program regularly; keep it simple and easy to understand.
  • Communicate changes in a positive manner; be up front about changes and explain how and why these changes are being made.
  • Employ multi-media methods, such as video, webinar, email, social media, and your internal company website.
  • Make sure employees understand what is available, the cost, and how to participate.
  • Provide total compensation statements to your employees so they know the value of their entire compensation package.


Total Compensation Statements

Employees often have no idea how much their employer actually contributes to health care and other benefits on behalf of their workforce.  Total compensation statements are one way you can communicate the value of the benefits you are providing to your employees.

What is a total compensation statement?

Total compensation statements outline a summary of all benefits that are available for employees and the value of those benefits.  The statement is personalized for each employee.  These statements are sometimes also referred to as benefit statements or total rewards statements.

Why should I offer this for my employees?

When you take into consideration all of the benefits listed above that you are providing your employees, their total compensation is significantly higher than their base annual salary or wage.  However, many employees only consider their salary as compensation because that is what they take home in the form of a tangible paycheck.  A total compensation statement can help your employees see the whole picture and understand their entire benefits package.  When they understand their entire benefits package they will be more apt to take advantage of all the benefits you are providing.  In addition, showing your employees how much you are investing in their welfare shows how much they are valued in your organization.

Total compensation statements can also serve as a powerful retention tool.  One common reason employees cite for leaving their employment for another job is an increase in compensation.  However, oftentimes they may only be considering their salary.  If you have provided your employees with total compensation statements, they will have the information they need to know their compensation is actually more than what they might be offered by another employer.


What is included on the statement?

Total compensation statements may include the following items. Please note, some of the items on this list may not apply to every organization. 

  • Image_BIC_Winter2013_3Employee’s annual salary or wage
  • Medical benefits
  • Flexible spending accounts
  • Paid leave, including vacation, sick leave, and holidays
  • Retirement benefits such as a 401K match or other defined contribution match
  • Bonus payments or other incentive opportunities above the regular salary or wage
  • Short- and long-term disability insurance
  • Life insurance
  • Employee assistance plans
  • FICA employment tax (imposed on both employees and employers to fund Social Security and Medicare programs)

These items are clearly itemized and then totaled on the statement to demonstrate that the annual salary is just a portion of the entire compensation your employee is receiving.  

You can provide total compensation statements in a variety of formats.  Some employers choose to provide these statements once per year to employees by mail.  Other employers provide the information to employees on a website they can log into and view at any time throughout the year.  Either way, make sure you are consistent in providing the information to your employees.

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