There are a number of contributing variables when you are working to attract and retain top talent in your business. You might have an attractive physical location, convenient work hours, or a relaxed dress code. You may have a strong internal culture of teamwork and collaboration, and opportunities for career progression. But a big part of what attracts top talent to your business is your compensation package. Are you doing a good job of communicating the full value of your compensation package – to employment candidates and to your current workforce?
Salary is only a piece of the cost, and the other compensation-related costs add up to “sell” your company when you are marketing an open position. In addition, you need to be thinking about ALL of them when you are budgeting for an addition to staff. A fully representative compensation analysis or report should include things like:
- Salary or hourly wages
- Paid leave, including vacation days, sick days, wellness or personal days, military leave, jury duty, etc.
- Health insurance – both the employer paid portion and the employee paid portion
- Disability insurance
- Life insurance
- FICA tax contributions
- Education reimbursement
- Matching payments to 401K plans or other retirement plans
- Relocation reimbursement
- Gym memberships
- Other employee perks
It would not be uncommon for the aggregate value of employee benefits to be as much as 30% of the employee’s salary. This means if an employee is earning $50,000 per year, the value of their benefits could be $15,000. If you include that value in your calculation of their compensation, their total compensation package would be $65,000.
Annual Compensation Reports
Consider producing and distributing an Annual Compensation Report for each of your team members. Sometimes employees feel frustrated when they notice all the dollars that are being withheld from their paychecks for things like taxes and health premiums. But the amounts being paid on behalf of your staff members for all the items listed in the bullets above tend to fly under the employee radar. An employee who is only moderately engaged might be tempted by a bigger hourly rate down the street, but not realize that the investment you’re making in them behind the scenes has greater economic value.
The Annual Compensation Report serves a couple of purposes. First, it does provide a more accurate rendering of what you are investing in each person in your company. But second, it provides perspective on just how much extra cash might be (or likely is not) swimming around in the budget tank waiting for someone to ask for a raise. In employee relations, sometimes more information helps you to manage the conversation.
Your employee benefits broker might be able to do a compensation report for you, but that will typically only take into account the value of insurance and retirement benefits that they are handling on your employee’s behalf. We can help you to produce a more comprehensive report that includes all taxes, leave, perks, etc.