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Hello Ann,
I realize total compensation/reward statements are distributed with great intentions. And they probably don’t do much harm. However, if statements that show how much things cost the employer were any sort of ‘solution’, wouldn’t they have worked by now?

Millions of statements (maybe more) have been distributed since the 1970s. Still, most employees don’t appreciate their benefits and pay. Sure, some employees will thank you for sending them out and praise their effectiveness.

But did the statements increase employees productivity…reduce turnover of your high-performers…cut costs…increase profits?

Who do the statements impress – your high-performers, or too many low-performers?

Do they help control health care costs – or increase them as some employees seek unneeded health services to ensure they spend the several thousands of dollars that your statement showed you paid the insurance company (they don’t want the insurance company to keep the money for profits.)

Why did the single employee with no kids, who is a terrific performer, have a lower total comp amount than the married with kids employee (with all extra ‘family benefits’) who keeps skipping out early and turning in less that stellar work?

What should employees do with the total comp information…share it with their co-workers, question how the amounts were calculated (a young person can get cheaper life rates than you show), take it to a prospective employer?

How does distributing the statement support your people strategy?

Ultimately the value of a reward or gift is determined by the person who earns or receives it -- not by the person or organization who gives it.

The actual value of total comp is not its cost – it’s how much value the receivers (employees) believe they get from the coverage and compensation. For example, the value of a health plan is not the $6,000 the employer pays. If there is ever a catastrophic medical situation, the plan can pay millions of dollars …and pay 100% of the covered bills for the rest of the year after the employee has paid just a few thousand. Isn’t that the value…and isn’t it greater than the cost?

Pay and benefit communication should help employees discover the value of the reward -- not just how much the organization had to take out of profits to pay for it.

That's my view...but I could be wrong.

All the best,
Dennis Ackley
DennisAckley.com

Dennis:

Thanks for your thoughts. I don't mean to imply - and I don't think any of the research I quoted does either - that issuing individualized total compensation statements should be your only means and method of communicating with employees about their compensation. But I do think that total compensation statements play a critical role in an overall communication plan/approach, in providing employees with information about the economic value of their total compensation.

I have worked with organizations in both camps, those that distribute and those that don't distribute total comp statements. This experience has convinced me that sharing this information is an essential communication step. Without this information, employees are often put in the position of making employment decisions based only on the more visible cash portion of their compensation. I have encountered a lot of employees over the years who ended up re-neg'ing a termination because they didn't understand the difference in value between their "current" total compensation package and the one being offered by new employer until it was too late (particularly those "hidden" non-cash elements).

And so I have been convinced that individualized total cash compensation statements serve an important purpose, for the employee as well as the employer.

What do others think?

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About The Author

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    Compensation consultant Ann Bares is the Managing Partner of Altura Consulting Group. Ann has more than 20 years of experience consulting with organizations in the areas of compensation and performance management.

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