Total Reward Statements
Total Reward Statements
With the overall employee turnover rate in the UK at over 15% a year, staff retention continues to be a major issue for employers. Research has identified one important aspect of the problem: most employees do not understand the value of their remuneration packages – such as fringe benefits, life assurance and pensions.
Over 50% of employees do not know how much their employee benefits are worth according to recent research. Generally speaking, when people are asked about the value of their employment package, they just think about their pay. Yet, more often than not, this is merely one component of their employment package. The other elements in their remuneration are ignored or forgotten, mainly because employers generally have not developed ways of communicating these issues.
Once you have spent time and money recruiting and training a new employee, it is important to ensure that they really understand the true value of the total remuneration package that they are being offered. This could play a crucial role in determining whether or not they accept the position and how long they remain with the company.
The non-pay benefits that form part of employment packages can sometimes cost employers as much as 50% of basic salary, and yet many employees can underestimate this value. One successful approach is for employers to introduce Total Rewards Statements, providing each employee with a breakdown of their Total Reward: detailing each component and showing its monetary value.
Over a quarter of employers in the UK have either implemented or are in the process of setting up a total reward approach. Employment packages are usually made up of the following components:
- Basic salary
- Working hours
- Annual leave
- Bonus schemes and performance related pay
- Opportunities for salary progression
- Flexibility to vary working hours and/or to work from home
- The benefits package (may include company car, contributory pension scheme, childcare vouchers, private healthcare, and flexible benefits packages)
- Share schemes
