16 Dec Total Compensation Definition: Understanding Compensation Communication
CareerBuilder studies show that 21% of employees in the US will change jobs within the next year. That is one in every five employees contemplating a shift. Given the astronomical sums of money, often up to 213% of the annual pay is needed to replace an existing employee.
Digging deeper, the survey also found this: 66% of respondents feel that they are not being adequately compensated and do believe that basic pay is something that drives their decision to quit or stay. Obviously salary is not the end all or be all of employee retention and engagement, but it does contribute. Workers should feel valued and the first place that they look is at the dollars entering their bank account.
What is Total Compensation?
Most employees know how much they are paid every month. But their understanding is often restricted to extrinsic rewards – like their salary and obvious social recognition. But there is so much more to the concept of compensation than mere dollars and awards. The workforce must be aware of all the resources that the company invests in ensuring its growth and skill development. And it must also fully realize the benefits that it gains from these investments.
This is where a Compensation Software emerges as a valuable and effective tool. It conveys the rewards of working for a particular organization to its employees in its entirety and covers the following areas:
- Comp Dollars: Covering salary, bonuses and one-time cash rewards that are disbursed on the basis of performance
- Benefits: Insurance carried by the company, paid leaves and retirement plans
- Career Opportunities: The scope of growth in position (designation), skills and professional conduct
- Intangible or Intrinsic Value: Extended as organizational support, empowerment by acknowledgement of abilities and meaningfulness
Total Compensation communication is extremely effective in inspiring engagement in employees who feel undervalued or unappreciated. Often the evident (comp dollars) can overshadow the implied (intrinsic value and benefits) and by breaking down the advantages of working for the company into statements workers can understand HR can shift their perspective from dissatisfaction to gratitude.