In order to effectively communicate the total value of the compensation package to employees, there are some minimum required elements for a total compensation statement. There are also several more valuable pieces of information to include in a total compensation statement if you can. Here we provide an overview of the 'must haves' and 'should haves' for your total compensation statement.

What should be included in a total compensation statement?

In order to effectively communicate the total value of the compensation package to employees, there are some minimum required elements for a total compensation statement. These include:

• Introduction. This might be a letter or other narrative that frames the information being provided.
• Summary or snapshot of the total rewards model. " In many ways, this is really the heart of the statement that you are providing to employees." David Janus told us in a recent BLR webinar. Some employees are only going to glance at this information (even if it’s well-written and well put-together). As such, the bottom line information should be clear very quickly. (See below for more information on what is included in the total rewards model).
• Charts. Include ways to visualize the information provided. This lets the information be absorbed better. It will help you reach more people and help them understand. The two most common areas to have in chart form are the total rewards breakdown (showing the percentage of total rewards that comes from each type of compensation) and cost of benefits breakdown (showing how much the employer contributes to benefits like health plans versus how much the employee contributes).

What does the total rewards model include?

As outlined above, the total rewards model is one of the minimum essential pieces of a total compensation statement. The total rewards model includes:

• Compensation. This includes base pay (cash compensation), incentive pay, and equity.
• Benefits. This includes things like health and wellness plans and retirement contributions.
• Cultural and environmental items. This includes things like work/life balance, organizational culture, and community involvement. This could also include other intangible benefits that affect how employees view themselves and the company.
• Recognition and development. This includes awards, training and professional development, and things like tuition reimbursement.

If you’re short on time and really have no way to do more, then the information above be the absolute minimum to convey. However, there are several more valuable pieces to include in a total compensation statement if you can. These include:

• A detailed explanation of retirement benefits, including future projections and personalized messaging. This could include information about how much the employee is contributing and how much the employer match is, as well as what that contribution level means for their retirement nest egg.
• Context or benchmarking. This might be salary benchmarks, but it could also be benchmarks of how much employee benefits (such as health insurance) cost compared to what employees at other companies pay.
• Plan descriptions for all benefit plans.
• Feedback mechanism to get further assistance from HR to better understand each of the components of the total compensation statement.

For more information on creating total compensation statements, order the webinar recording of "Total Compensation Statements: Inform, Educate, and Motivate Your Workforce." To register for a future webinar, visit http://store.blr.com/events/webinars.

Compensation.BLR subscribers can access the webinar as part of their subscription.

David Janus is a principal with Charlton Consulting Group, a Maryland-based firm that provides consulting services, custom software development and outsourcing solutions to HR and benefits professionals across the U.S. and Europe. Janus’ primary focus at Charlton is the development and delivery of total compensation communications.