What is a total compensation statement?
A total compensation statement is a document that communicates an employee’s compensation beyond their base salary. This document lists the employees forms of compensation outside of the base salary to show the employee what their total compensation consists of.
The compensation statement can provide an employee with transparency of the value of their pay package and how much the company is investing in their career. When employees see how the company is investing in their career, this can lower turnover and help keep top talent.
What should be included in a total compensation statement along with an employee’s salary?
A total compensation statement shows a comprehensive breakdown of all the direct, and indirect compensation that is provided to an employee.
When we think of direct compensation, we are referring to items such as an employee’s salary or hourly rate, commissions, bonuses, personal device reimbursements.
In terms of indirect compensation, we’ll want to include any non-monetary items. Items such as paid sick leave , holiday pay, company provided meals, life insurance, or medical, dental, and vision insurance.
In the end, your statement should have all of these direct and indirect compensation items listed, with the total value calculated. The more details you’re able to provide, the better.
How to create a total compensation statement that benefits employees:
The first step in creating a total compensation statement is breaking it down into two parts: Compensation and Other Benefits and Perks.
The Compensation section is where you’ll outline the full monetary compensation provided to an employee, which can include:
- Base earnings (salary)
- Variable pay, bonuses, stock options, etc
- Group Retirement Savings Plan contributions, if applicable
- Statutory deductions
- Employee benefits contributions
Depending on your offerings and how you want to structure your compensation statement, you could also include vacation, personal time off, professional development dollars, and/or volunteer hours.
Anything that you offer to employees that you don’t talk about on your total compensation statement is a missed opportunity, so if it doesn’t fit under-compensation, be sure to mention it elsewhere!
Are total compensation statements required to be provided by HR?
Total Compensation Statements are not legally required documents, but they are a really good idea and something that we at Bizhaven recommend that employers provide to both potential candidates and existing employees.
These statements are going to give your employees a much better idea of the full value of their compensation. Not just their base salary, but all of the other things that go into someone’s total compensation, like their paid time off or medical benefits, holiday pay, things like that.
Therefore, having a total compensation statement, while not legally required, is still a good idea that can benefit employees. We highly recommend it. And that’s a service that Bizhaven can help your business develop.
If you have more questions please reach out to Bizhaven at [email protected]