Employers that use total rewards statements believe they are effective at helping to improve employees' awareness of the value of their benefits, as well as to retain and engage them, according to a survey by Aon Hewitt, the global human resources consulting and outsourcing solutions business of Aon Corporation.
These personalized statements summarize each employee's base compensation, as well as the value of health-care benefits, retirement and other savings programs, vacation and any other rewards received, enabling employees to understand the full value of their compensation.
Thirty-two per cent of 386 Canadian organizations surveyed provide annual total rewards statements to employees.
"Total rewards statements can be extremely useful in helping employees gain a complete understanding of their total compensation," said Diane McElroy, a senior vice-president at Aon Hewitt in Toronto. "However, the 'next generation' of statements goes beyond sharing information to driving action, enabling employees to make the best possible use of the programs available to them."
Impact of total reward statements
Employees' understanding and appreciation of their benefits and organization's total investment improves
Employee engagement increases
Employee/executive retention is easier
Participation in voluntary savings plans picks up
Employees' savings activities and participation grow
Technology is a major factor in the evolution of these statements and in creating a cost-effective and successful call-to-action, according to McElroy.
"By providing online total rewards statements, employees can link to additional personalized information, such as past benefit usage or savings history. Employers can then use the statement to demonstrate the money lost by not contributing to a retirement savings plan with a company match or the projected difference in retirement income if the employee saves more. This may encourage employees to make additional voluntary contributions."
The total rewards statement can also be used to indicate to employees when it may be more tax-effective to pay for certain medical expenses through a health-care savings account, said McElroy.
Certain employers are also developing total rewards statements for a new audience.
"Some organizations are providing these statements when they make offers to job candidates," she said. "That way, if the potential new hire receives another offer — especially one with a higher base salary — he or she can make an informed comparison and determine whether a bigger paycheque really does mean greater compensation. This can be a smart approach in a tight labour market."
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