This year, HR professionals continue to face the reality of unfilled positions and high turnover as employers compete for talent in a labor pool that can feel like it’s simply drying up.
Just how bad is the problem? In 2018, 41% of US companies reported having open positions for six months or more. And, they experienced a 15% voluntary turnover rate that cost an estimated $600 billion. It’s not the same across the board; some industries—including retail—are experiencing even higher turnover.
The Work Institute estimates that over 75% of employees who quit do so for reasons that the employer can control. This includes career development, work/life balance, manager behavior and compensation and benefits.
Benefits matter to retention rates.
While career development is the number-one reason for departure, the importance of benefits in the exit decision of employees has more than doubled since 2010. During the same period, compensation as a factor in leaving increased 30%. This reinforces what HR and benefits pros already know: benefits really matter.
Employees are willing to go elsewhere if they feel they can get better benefits. Not only do 66% of people say benefits and perks are their number-one factor when considering a job offer, benefits can also be an effective carrot enticing employees to what they consider greener pastures. Over half of employees say they left a job for better benefits, while 42% indicated they are considering leaving for the same reason
The "hidden paycheck" needs to be communicated to employees.
They are definitely on to something. Benefits are a large chunk of the compensation pie. While wages and salary account for around 62% of compensation, the remaining 38% is those all-important benefits. That means that when employees check their paystub, more than a third of the value of their compensation is missing. This is what we call the “hidden paycheck.”
When employees are looking at compensation and benefits as a decision point in whether to seek work elsewhere, getting that hidden paycheck into the light of day is vital. Highlighting employees’ total rewards may never have been more important than it is now.
And, it can be a differentiator because your competitors might not be doing it.
According to Payscale, just 36% of employers overall leverage the power of a total rewards or total compensation statement. By contrast, 43% of high-performing organizations use these employee engagement tools. And that means you can pick up a competitive advantage relatively easily.
Using a total rewards statement provides transparency and reveals more value.
Total rewards statements offer employees the opportunity to understand and appreciate their entire compensation package—both pay and benefits. The statements can include traditional or core benefits—like healthcare coverage and retirement plan contributions—along with non-cash rewards like time off and training. These statements enable employees to see the entire value of what they gain with the relationship with their employer and they highlight the real costs of benefits the employer provides.
Employers that use total rewards statements demonstrate a level of transparency with employees that other organizations don’t, and they take advantage of the significant value of benefits and the importance employees place on them.
Healthcare and salary are most strategic highlights in a total rewards statement.
According to EY, employees place the highest premium on competitive salary and generous healthcare coverage, two components of compensation that total rewards statements are especially effective at highlighting.
For Gen Z, healthcare is even more important than salary, so for this generation just entering the workforce it will be important to keep healthcare and other benefits top of mind, another strong argument for leveraging total rewards statements.
Beyond traditional healthcare benefits, employees value policies and practices that support their family life, including such programs as parental leave and fertility treatment. As they face increased pressure around recruiting and retention, more employers have focused on implementing these types of family-friendly benefits.
These benefits have tremendous value—both in terms of their cost and their importance to employees. Total rewards statements are the ideal place to reinforce that value for employees.
In this historically tight labor market as employers continue to focus on their recruitment and retention activities and seek techniques to differentiate from competitors, employers need tools that help them engage employees around the value of benefits. Total rewards statements can be a powerful tool to reinforce the value of an employer’s benefits and compensation program. They offer employees an easy-to-understand resource that helps quantify the hidden paycheck represented by benefits.
Some total rewards statements are good, but not all are great. Find out what makes a total reward statement best in class in our e-book.
Interested in learning more about finding the right benefits solution to support your total rewards strategy? Check out our guide below.