The more that employees understand their benefits, the more they will appreciate them
If there’s one thing that I think we, as benefits professionals and plan sponsors, should be doing better, it’s communicating the value of benefits to our plan members.
Here’s the thing: Yes, we have certain goals in mind when we provide benefits. But how well we achieve a lot of those goals is very much dependent on how well we communicate the value of their benefits to our people.
In other words, it’s possible to provide an excellent benefits plan and get very little appreciation in return, simply because our employees take it for granted or don’t understand the true value of what they have.
Take recruiting and retention as a couple of good examples. Clearly, in order to be an effective recruiting incentive, our benefits have to be spelled out in detail so that potential hires can see the value and do the math for themselves. In my experience, this can be doubly effective, since some employers with whom we may be competing for top talent may not do this very effectively, and since many people – especially the younger ones – can be quite keen to put a tangible valuation to the otherwise intangible concept of “benefits.”
The same logic applies to long-term retention of key staff members – which is to say that it doesn’t hurt to remind them at least a couple of times per year that they are receiving valuable benefits even if they don’t show up on their payroll deposit slips every two weeks.
One very effective way to achieve this is through “Total Rewards Statements” or TRS’s. These statements provide a detailed breakdown of an employee’s compensation package, including salary, benefits, and perks.
Total Rewards Statements are comprehensive documents that outline the full value of an employee’s compensation package. They go beyond just the base salary to include potential bonuses, health benefits, retirement plans, vacation beyond the statutory minimum, paid time off, and other perks such as wellness programs or professional development opportunities. By providing an overall view of what the employer offers, these statements help employees understand the true value of their employment.
A TRS can be prepared in the general sense as a part of a position description and as part of a hiring package. Specific statements can be created – and regularly updated – for each employee.
Implementing an effective TRS program, avoiding the pitfalls, and making sure it is effective, accurate and up to date can seem like a fairly daunting project, but it doesn’t need to be overly difficult. Here are some key considerations.
- Do the research. Long before you roll out any program, look at the different forms, standards and considerations that apply to TRS. Decide what approaches apply best to your particular workplace. Consult with fellow managers. Talk to employees about what’s important to them, what they already know, what misconceptions they may have, and where the gaps in understanding exist. Make sure you have a good understanding of what you want to achieve.
- Use technology. There are many Human Resources (HR) software packages, and add-on apps, that can be of tremendous help. One of the most important things an HR solution can give you is standardization – which is also my next point.
- Standardize. Make sure that the TRS’s you give to employees are rigorously standardized, to make sure that each employee’s TRS is using the same points of reference, covering the same topics, and doing the calculations by the same logic. They all need to be apples-to-apples comparisons so that there is no possibility of appearance of unfairness.
- Customize statements. Tailor the rewards statements to reflect each employee’s specific compensation package. Emphasize the most valuable and unique benefits that the employee receives. Personalised statements are more impactful and meaningful.
- Protect the confidentiality of each employee’s TRS. Many, or most, TRS’s will be similar if not identical, but it is still important to protect the confidentiality of information regarding each employee’s remuneration. Employees may share their information – in fact, assume that they will – but it’s still important to treat this information as personal and private. Since most of the information is shared electronically, make sure it is sign-in and password protected.
- Be realistic and practical. Employees will look at their TRS with a very critical eye. Things that are “potential” or “possible” can end up creating cynicism – the very opposite of what you’re trying to achieve. If there are items that are hypothetical, or that can be achieved under certain circumstances, include them in a separate section.
- Strive for accuracy. Make sure that anything you put in the TRS is correct and applicable to the employee in question.
- Make sure that the TRS is clear and understandable. This is no time for legalistic phrasing or terminology. Use plain language and consider using graphs and pie charts.
- Stay up to date. Make sure all data is current and relevant. When an employee’s status changes, update the TRS and communicate it to the person.
- Communicate. Provide a comprehensive breakdown of all components, including base salary, bonuses, health benefits, life and disability coverage, retirement plans, paid time off, and other perks. Show the total value of the compensation package to help employees understand the full extent of their rewards.
- Invite feedback and follow-up questions. If employees have questions about the details of their TRS, it’s both an opportunity to engage with those employees and a chance to possibly revise and improve the format of the TRS to answer those questions proactively for other plan members.
The overall goal of a TRS program is to raise awareness of, and appreciation for the benefits your workplace provides employees. I always make it a point to share with our clients the bottom line – the annual cost, per employee, of the benefits they are giving their people. That’s valuable information you can share, at least as a starting point, with employees.
The total value of benefits is a key part of the value proposition for a given workplace, and an opportunity for plan sponsors improve satisfaction, commitment and loyalty on the part of plan members.
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I really appreciate comments, ideas, suggestions or just observations about the blog or any other topics in benefits management. I always look forward to hearing from readers. If there’s anything you want to share, please email me at bill@penmorebenefits.com.
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