Benefits and Compensation

Total Reward Statements—Show Employees You’re Invested in Them

A valued employee is a retained employee. How can employers show their workers how much is invested in their efforts (beyond just their wages)? By providing total reward statements. Today, we present some advice on crafting these reports from Consultant John Rubino.

Rubino, who is the owner of Rubino Consulting Services, offered his expertise in a recent webinar presented by BLR® and HR Hero®.

Before you start thinking about total reward statements, Rubino says that other basic compensation program objectives should be met. A compensation program must be:

  • Internally equitable
  • Externally competitive
  • Affordable
  • Understandable, legal, and defensible
  • Efficient to administer
  • Capable of being reshaped for the future
  • Appropriate for the organization
  • Attractive and able to retain and motivate employees
  • Structured to align employee efforts and business objectives
    Having these objectives in the background will highlight the importance of well-communicated total reward statements, which also address the objectives, says Rubino.


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What Is a Total Reward Statement?

Rubino estimates that about 90% of his global client base use total reward statements (with even more jumping on the bandwagon), making them a prominent and valuable tool for all sorts of employers. So what are they?

Total reward statements:

  • Are personalized statements listing everything that comes from the organization to the individual employee.
  • Provide a reassuring picture to employees and are a tangible reminder of the company’s financial commitment to them beyond just base pay and benefits.
  • Have been in use for at least 20 years. Rubino notes you may have heard of them before, previously referred to as “Employee Benefit Statements,” “Total Compensation Statements,” or “Hidden Paycheck Statements.”

Total reward statements can also include things that employees perceive as being provided by the company, adds Rubino. And how do you aid in this perception? Through effective communication.

Why Use Them?

Demonstrating how employees are valued is more important than ever now—the economy is improving and retention can no longer be taken for granted. Rubino shares some recent statistics:

  • Benefits constitute 30 percent to 40 percent of an employee’s total compensation package.
  • Next to direct pay, benefit expenditures represent the second largest payroll expense.
  • 95% of employees receiving total reward statements have a greater understanding of their reward package.
  • 78% of employees receiving statements are more likely to stay with their employer.
  • Total reward statements have been proven to increase morale and employee retention.

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What to Include in a Total Reward Statement

Total reward statements do not need to be too complicated, says Rubino. However, at a minimum, the following items should be included:

  • Compensation information. This includes base salary, overtime, bonuses, incentives, and commissions. These are the basic staples of a total reward statement, says Rubino—the information is in front of employees’ faces all the time already.
  • Leave benefits (number of days off). Analyze what your company offers in terms of holidays, personal time, vacation/PTO banks, sick leave, bereavement, and even jury duty.
  • Insurance benefits. Be sure to account for both employee cost and employer cost on the statement, says Rubino—show how much your organization has invested, and that the employee isn’t shouldering all costs. Examples include medical; dental; vision; flexible spending accounts; cafeteria plans; healthcare spending accounts; basic life insurance; accidental death and dismemberment costs; supplemental/dependent life benefits; short-term and long-term disability; and/or business travel accident insurance.
  • Financial security elements. Again, says Rubino, divide this up into employee cost and employer cost. Include social security, Medicare, federal unemployment insurance, state unemployment insurance, workers’ compensation costs, and retirement plan elements (such as 401(k) matches or employee stock ownership plans).
  • Additional benefits, including work/life programs. This can be huge, says Rubino—you’re only restricted by your own innovation and creativity. Just make sure these benefits are aligned with company culture! For a total reward statement, you could incorporate any number of things, including adoption assistance, auto allowances, childcare programs, education/tuition reimbursements, employee assistance programs, employee meals, health club discounts, paid parking, or uniform expenses.

In tomorrow’s Advisor, Rubino presents ways to communicate total reward statements to employees, plus an introduction to PayScale’s 2015 compensation best practices report, Attack of the Out-of-Date Comp Plan.