Salary is one of the largest influencing factors in an employee’s decision to join a company. But it’s also one of the biggest reasons talent leaves. However, increasing pay to retain personnel isn’t always the best option. Often, internal policies, procedures, or budgets limit how easily you can adjust pay. Salary bumps are also expensive and can create pay inconsistencies. Most importantly, they don’t capture the total value of your employee’s compensation (that is, their total rewards).
This is why total rewards have become such an important part of the pay conversation. Employees often don’t think about how other aspects of their compensation package their personal finances or quality of life. And that’s often because employers don’t do a good job educating employees on all of the benefits of their employment (monetary or otherwise).
Communicating total rewards can be tough for HR and compensation teams. Explaining some forms of pay—like equity compensation—can be technically challenging. Applying a dollar value to some perks and benefits can be also difficult or misleading. Plus, creating total rewards statements that break out every element of the compensation package for each team member is manual, time-consuming, and prone to errors.
However, if you find you're losing employees over salary increases or getting asked a lot of questions about pay, it’s time to invest in telling a better total rewards story.
In this piece, we explain how to transform your total rewards statement and process through transparency, education, and scalability so it can be the true differentiator it’s meant to be.
Creating a Comprehensive Total Rewards Statement
Most total rewards statements include bonus plans, equity compensation (e.g. stock options), and the value of benefits like health insurance or health spending accounts (HSAs). But what you include—and how you present it—can have a large impact on the value employees perceive you deliver.
Consider the following benefits and categories as part of your total rewards program and statements:
Category 1: Compensation
- Base salary. If you can go beyond base salary to show a history of salary growth or their position in their pay band, even better. (Plus, you might need to include it to comply with pay transparency legislation.) This illustrates how you’ve invested in your employee’s growth and recognized their performance over time.
- Variable pay. This could include their bonus plan, sales commission, performance incentives, and profit sharing. Highlighting their on-target earnings can be motivating, as it communicates their payout potential. You may also want to include historical payout amounts so they can see how much they’ve earned to date.
- One-time bonuses. These include various lump sum bonuses that are given to employees throughout the year, such as referral bonuses, sign-on bonuses, and spot bonuses. Illustrating historical totals help employees see how much they’ve earned—and how much they’ve been valued by your organization—throughout their employment.
- Equity. This includes any form of company equity, like stock options or RSUs. This type of compensation tends to be the most difficult to explain or calculate, so consider sharing educational materials in your total rewards statements. Including information on vesting schedules or vesting periods, projections on share prices, and how to calculate returns (with the right legal disclaimers, of course) will help employees see the potential of these rewards.
Category 2: Benefits
- Health insurance: In addition to placing a value on your standard medical, vision, and dental coverage, you’ll also want to outline areas where you offer additional coverage, such as higher limits or greater-than-average coverage via HSAs, mental health support, nursing options, reproductive support, life insurance, and short- or long-term disability payouts.
- Paid-time off (PTO): Outline where you go above and beyond typical PTO by listing any vacation time, parental or adoption leave, sick leave, caretaker leave, bereavement leave, volunteering days, or sabbatical programs that you offer.
- Retirement: This includes contributions to 401(k) and IRA plans (if you're in the US) or RRSPs (if you're in Canada). In addition to sharing employer contributions or matching, consider illustrating the potential value of these investments over time to help quantify the long-term benefit to employees more tangibly.
Category 3: Professional Advancement
- Professional development: These funds cover training or educational resources for employees, such as attending conferences, purchasing books, or taking technical courses.
- Formal education: This can include offering scholarships, discounts, or reimbursement for certificate and degree programs.
- Training: Outline any internal training programs—including mentorship, advancement, or management training—that can help an employee’s long-term career prospects.
Category 4: Work-life Balance and Wellness Perks
- Flexible working options: This can encompass hybrid/remote working options, coworking space memberships, or work-travel policies. For families and parents, this may mean childcare benefits or flexible working hours.
- Wellness programs: Anything that supports personal wellness (but isn’t covered under health benefits) goes here. This can include fitness stipends (for gym memberships or classes), sporting equipment purchases, bike share memberships, or meal delivery services.
- Financial support: Offering employees discounts on things they already spend money on—like parking or public transportation, cell phone or internet plans, or even your own products and services—falls under this category. Personal finance support, including financial planning or tax filing services, can also be included here.
Category 5: Other Perks
- Miscellaneous: This area is for unique benefits that don’t fit into other categories. This can include things like free meals or snacks in-office (or remote stipends for meals), equipment allowances, special company events (like retreats or offsites), or other interesting perks that differentiate your company from others.
⭐ Taking Total Rewards to the Next Level
Not every reward on your statement needs a dollar value. Some benefits, like unlimited vacation or working from home can be hard (or misleading) to quantify. But including them in your rewards statement—without assigning a dollar value—reminds employees about all of the perks they’d leave behind if they left. Make sure to keep this list focused on benefits that aren’t easy to find at other organizations. (Birthday cards and Zoom happy hours shouldn’t be included.)
Delivering Total Rewards In an Impactful Way
Having a total rewards statement is just the first step. To get the most value out of your total rewards program, you need repeated employee communication and education.
Here are a few ways to improve how you deliver statements:
1. Simplify the complex through education. Some rewards need extra context and explanation. For instance, calculating bonuses and equity can be tricky—so employees may not fully see how it contributes to their overall pay. Hold training sessions to show employees how to do these calculations. Consider including links to illustrations, examples, templates, and training materials (whether they’re internal or external) in your total rewards statements to help employees see the true impact of these rewards. (Some compensation management tools will calculate these for them automatically, based on data from your HRIS.)
2. Revisit frequently—not just annually. Most companies share total rewards statements during performance or salary reviews once a year. However, there are more touch points to consider, such as when employees are newly promoted or past their probation period. They should also be revisited when there are changes that will impact total compensation, such as a funding round (i.e. a change in the company share price), updates to benefits, or a new commission structure. Company-wide meetings are also a good time to remind employees about their total rewards, too.
3. Deliver via a personalized, accessible format. Once you understand each employee’s total rewards package, you need a way to share it with them. This is done either online or in person. Whether you offer the statement as an email summary, a physical PDF, or via a total rewards software solution, it’s important that it be tailored to each employee. Whatever format you choose, it must be easy to understand, accurate, and accessible to each employee. It’s also important that your format be for your HR or compensation teams to use. (We’ll cover more on that in the next section!)
⭐ Taking Total Rewards to the Next Level
A total rewards statement can be a great place to share your compensation philosophy (either as an introductory note or by linking to a full document). This helps employees understand why you’ve built the total rewards package the way it is and reminds them about all the ways you deliver value to them (outside of their base salary).
Scaling and Personalizing Total Rewards Management With Technology
Creating quality total rewards statements is difficult and time-consuming for HR teams because:
- Each statement must be customized per employee
- Copying and pasting data into documents can lead to errors
- They’re often created during salary or performance reviews when bandwidth is low
- Individual equity or bonus calculations add too much complexity
- The level of customization is limited by team capacity or access to data
- They sometimes require design resources
To take your total rewards program to the next level, you’ll need a digital total rewards solution. These platforms connect with your HRIS to present accurate, real-time data. Then, they automatically generate an individual statement that employees can access directly in the platform—no more copying-and-pasting or pdf downloads and emails needed. These solutions can also be programmed to calculate equity or bonus projections automatically, and they require very little design formatting once a template is created.
These solutions don’t just benefit your administrative team with added efficiency. They also increase the level of customization, transparency, and real-time accessibility you provide to employees. Depending on the level of sophistication in your total rewards solution and HRIS data, you may be able to show employees their movement within their pay band, include educational content and FAQs, and allow employees to model different compensation scenarios.
⭐ Taking Total Rewards to the Next Level
The more comprehensive, personalized, and illustrative your total rewards statement is, the better. Showing them their pay growth, current compensation package, and future earnings potential will help employees see how they’ve been valued by your company over time and how they’ll be taken care of in the future—if they stick around.
Growing Employee Engagement, Loyalty, and Retention With Better Total Rewards Statements
The value you give employees goes well beyond their base salary. They deserve to understand their total compensation—and review it more frequently than once a year during a review process. It shows not only how far they’ve come but how much your company truly values all that they do.
To make your total rewards statements a true retention driver, you’ll need a tool that can scale the process. See how Barley’s compensation management platform can improve your total rewards process. Book a demo today.