There is a lot that goes into compensating your employees. It’s not only an hourly wage or salary but a combination of monetary compensation and various other benefits. If you are struggling to keep or hire employees because it's difficult to explain your full compensation package, you are not alone.
There are so many different types of benefits and compensation. Most employees don’t think about them because it's not monetary but everything from PTO to life insurance costs you as an employer. Your employee might have a $400 insurance premium through your company, of which you are covering half. That’s $200 in addition to the wage you are paying. It’s a significant amount, and one that your employees should be aware of.
At PaydayHCM, we've helped businesses of all sizes understand and communicate the value of their compensation packages to employees for more than three decades. The process has changed with the rollout of new technology over the years but the concept is still the same. Helping your employees understand the value of their total compensation package boosts retention. It also gives potential employees a better idea of what you are offering.
In this article, we are covering some types of compensation offered to employees and how you can help them become aware of their value. We also introduce tools to help you along the way.
What Should a Total Compensation Statement Include?
There are several items that you can include in a total compensation statement. Remember that the goal is to show what you are providing besides the obvious figure, their hourly wage (or salary).
The main areas you will want to cover include financial compensation, retirement, health benefits, and time off. You may want an “other” category if you offer anything that doesn’t fall into the first four categories.
First, let’s take a look at how you can give your employees a better understanding of their compensation package.
Create a System So That You Can Keep Track of Employee Compensation
The first thing you will need is a way to organize your information for each employee. We recommend a couple of options for this. An Excel spreadsheet or Google Sheet are both great free options for organizing yourself. You can use these to keep track of the different types of compensation you offer for each employee.
From there, you can either create a spreadsheet for each employee, listing their various types of compensation. These include:
- financial compensation
- health benefits
- time off
Or you can list each employee on the same sheet and list each form of compensation below each name.
What you choose will depend on how many employees you have, among other things. If you’re somewhere between 1 and 10 employees, this can be a good option for you. The important thing to remember is to have a forward-looking mindset as you put in place ways to track these numbers. It may not be hard if you only have five employees but imagine the increase in complexity when you have 20 employees or more!
Some Programs Can Help Keep Track of Compensation for You
If your business has grown to the point where it is becoming difficult to keep track of each employee's various forms of compensation or you feel that organizing and keeping track of those numbers is not something you want on your plate, there are options.
Some companies specialize in compensation statements, like CompAnalyst or COMPackage. They have systems that are essentially like what you would create with your spreadsheet but with more robust capabilities and greater accuracy. Many payroll companies include this in their offerings as well.
A large provider like ADP offers compensation statements alongside payroll and other services you may need. Their prices are custom quoted though, so you will have to give up some personal information to get pricing for your business. Paychex also provides a total compensation summary as part of its services. Paychex services start at $39 a month and $5 per additional employee, they can be about $3,300 per year for a small business.
At PaydayHCM, we utilize the isolved platform to provide comprehensive payroll services. It has compensation tracking abilities, the ability to create total compensation statements, and generate prospective compensation statements to show to potential hires. Payday services average at about $1200 a year for small businesses.
These are great choices if you want to simplify your process as much as possible. With an all-in-one platform, you can access all your employment management information and reports in one place. You won’t have to go back and forth between different systems, which saves time and reduces human error.
Keep Your Employees Informed About Different Forms of Compensation Moving Forward
If you have been struggling to retain or hire employees or are just having a hard time tracking the various forms of compensation you are providing, there are plenty of ways to handle it. You can choose anything from free spreadsheet apps and manual entry to full-service management programs that can do it all for you for a price.
At PaydayHCM, we offer the same streamlining capabilities as the larger companies but with the added benefit of a single point of contact, with a real person. We have found in the past three decades that this is the best way to get your problems and questions answered as quickly as possible.
You can build on this knowledge by learning more about the benefits of choosing a comprehensive employee management program. We can also offer more insight if you would like to speak with one of us directly.
Remember, business management doesn’t have to be difficult or time-consuming. You can find ways to provide things like compensation statements, even with no budget. It just takes some time and research to find the best option.