22 Jun Communicating a Compensation Plan to Your Employees
In today’s job market, attracting and retaining top talent has become more challenging. Companies need to educate their employees on the various components of their pay package, rather than assuming they understand their offer letter or pay stub.
If you’ve developed a compensation plan that’s both competitive and equitable for your organization, your next step is to communicate the details of the plan to your employees. Total rewards communication is a powerful strategy for attracting and retaining top talent. Most employees assume their compensation is comprised of their base pay plus any additional bonus they may or may not receive. They often forget – or perhaps aren’t told – that almost 30 to 50 percent of their entire compensation is from other areas, such as:
- Profit sharing or 401k
- Retirement/pension plans
- Stock or equity
- Bonuses and incentives
- Rewards and recognition
- Personal time off and vacation
- Opportunity income, such as professional development programs, tuition reimbursement, etc.
So, part of your compensation strategy should be to communicate the employee on their total compensation package. This step is absolutely crucial and shouldn’t be avoided, because if your organization fails to clearly articulate and explain in detail the total value of employment to your employees, you could wind up losing valuable talent unnecessarily.
Here are some simple ways you can integrate a compensation communication process into your strategy:
- Compensation Management – Have a system in place that provides a clear and transparent process so managers can easily extract compensation data for their staff. Quick and easy compensation answers mean more engaged and happier employees.
- Total Rewards Communication – Create a total rewards communication strategy that summarizes the total net value of employment. This can outline the direct or indirect value of many of the items shown in our list above, thereby providing a more tangible value to their employment. Better yet, implement a total rewards portal that allows employees real-time online access to this data 24/7. This is particularly helpful for those using a pay-for-performance model or for retaining employees with stock.