Employees may focus on base pay when thinking about compensation, but their compensation extends beyond just their base salary. In this competitive labor market, presenting employees with a compelling total compensation package can make the difference in your recruiting and retention efforts.
What Is a Total Compensation Package?
A total compensation package includes all rewards elements that an employee receives. A total compensation statement shows the cash value of each element, which can be presented to employees to show them the total value of their compensation package.
In today’s talent market, where employee turnover is on the rise, employees often cite pay as one of the top reasons for changing jobs. Presenting employees with their total compensation package can be a proactive way to aid retention, helping employees understand the full value of their package.
What Should Be Included in a Total Compensation Package?
Your organization’s compensation philosophy and strategy will dictate which types of rewards you include in your total compensation package. Your compensation and benefits package might include:
- Base pay
- 401K or 503b employer contributions
- Health, life, and other insurance
Depending on what types of rewards you offer for each position, you might choose to include additional reward elements as well. Perks such as gym membership, tuition, cell phone service, and company discounts can all qualify as part of a compensation package along with equity, stock, and other long-term incentives.
Executive compensation package examples often include additional perks such as a company car or other transportation, as well as other forms of short- and long-term incentive pay.
Total Compensation Package Example
There is not a “one size fits all” format for putting together compensation packages and total compensation statements. What works well for one organization or even one position may not work for other positions or companies, based on the rewards mix in use. In all cases though, the goal is to quantify the total value of all cash compensation, benefits, and other perks that are part of the total compensation package.
When putting together total compensation statements, it is best practice to show what percentage of the package is base salary compared with remaining benefits, to help employees understand just how much compensation goes beyond their base.
As you start working on your total compensation statements, you should also consider documenting explanations for the different types of rewards vehicles. Many organizations rely on line managers to communicate total compensation packages to their employees, and providing these helpful explanations to managers can ensure that compensation communications go smoothly.