nce, total reward statements were a rundown of how much an employer paid for
an employee to work at the company. The personalized documents, which sometimes
were published in fancy bindings, were designed to retain and encourage employees
by letting them know how much the company spent on them. They have been particularly
useful over the past several years as more employers have moved away from shouldering
the bulk of retiree and health care costs to shifting some benefit costs to employees.
The statements showed employees that even with cost-sharing, the company still was
investing a lot in their benefits.
But with the Internet’s ability to communicate very current
information to employees, total reward statements have taken on a new meaning for
most employers. While these communications are still an effective way of engaging
and retaining workers, more companies are using them to prompt employees to take
action, says Debbie Slappey, a communications consultant at Mercer Human Resource
Consulting.
"By using real-time data, companies can use these statements
as a call to action for employees," she says. For example, many employers are tying
in their organization’s business goals into these statements so that employees can
see how close they are to these targets.
Other companies are using statements to encourage employees
who are not taking full advantage of benefits, like 401(k) plans or wellness programs,
to do so, experts say.
"Total reward statements have become a two-way discussion
now," Slappey says. "If you are not talking about rewards, it means you are less
competitive than other companies because employees have come to expect it."
Employers who have adopted total reward statements are seeing
the benefits. Ninety percent of employees have a higher appreciation for the value
of their employer-provided benefits after receiving these statements, according
to a recent study by Aon Consulting. Ninety-five percent said they will save their
statements and refer to them throughout the year.
And a year-over-year analysis by Aon found that the number
of employees who were on track to retire at age 65 rose 5 percent if they were receiving
a total reward statement with a focus on retirement-planning education.
Although determining the return on investment from offering
these statements can be difficult, Buck Consultants estimates that a company with
5,000 employees and an average per-employee salary of $37,000 could realize up to
$1 million in savings.
That number includes savings gained during future wage negotiations,
turnover reduction and health care savings. By communicating more about health care
expenses, for example, companies can get employees to accept premium increases more
readily, thus allowing employers to realize greater health care savings, according
to Buck.
"Total rewards statements help companies with cost sharing,
retention and recruiting," says Scot Marcotte, principal and technology solutions
leader in Buck’s Chicago office.
PR For HR
Indianapolis-based WellPoint has offered employees an online
total reward statement for the past five years, but relaunched the site in January
to incorporate employees of Anthem, which merged with WellPoint in 2004.
The site is designed as a portal for HR, giving WellPoint’s
42,000 employees a view of what the company offers and pays for them in five categories:
career and company; pay and recognition; financial future; balanced life; and well-being,
says Kelly Soper, vice president of compensation at the health benefits provider.
For each category, employees can see not only what WellPoint
pays for their benefits, but also what the company offers that they’re not taking
advantage of, Soper says.
For example, if an employee is eligible for WellPoint’s tuition
reimbursement program but doesn’t take advantage of it, the statement will point
out what the employee could be doing, she says.
The financial future section, which discusses retirement benefits,
also includes how much employees can expect to get from Medicare and Social Security,
so they can see if they need to save more.
The balanced life section outlines paid-time-off days and
holidays. The well-being portion describes the employee’s health care benefits,
as well as programs the employee might not be using.
The pay and recognition category discusses the employee’s
salary and incentive program. This section also includes the company’s annual business
goals, with a real-time view of how close the business is to meeting them, Soper
says.
"Employees can always log on to the site to see how we are
doing compared to our targets," she says.
More companies are taking the approach that WellPoint is using
to ensure that their total reward statements are more strategic, as well as to reach
employees who might be working far away from corporate headquarters, says Bill Crawford,
senior vice president at Aon Consulting.
"This is a great way to get that employee working in Des Moines,
Iowa, to feel more engaged in the entire organization," he says.
Another trend among employers is using the statements as a
performance management tool. WellPoint’s company and career section of its total
reward statement not only discusses the company’s values and performance management
system, but details how the employee is ranked. This is information that only the
employee sees. It also offers information on how employees can learn more about
opportunities for promotion at the company, Soper says.
But an increasing number of companies are doing even more
to tie their total reward statements into their performance management, Slappey
says. Some are using their total reward statements as a starting point for annual
performance reviews. Managers will sit down with employees and, with at least part
of the statements in hand, discuss with them their goals and how they can reach
certain targets, she says.
"Companies are seeing that putting up a statement on its own
doesn’t create engagement," she says. "What engages employees is explaining to them
how they can reap those rewards and get ahead in terms of opportunities."
Other uses and challenges
One of the greatest challenges with offering these statements
is making sure that employees see them, Soper says. Once companies have put the
statements online, they have to make sure that employees log in to view them.
To address this, WellPoint and other companies periodically
remind employees about the statement portal. An ideal time to do this is during
open enrollment periods, Marcotte says.
Another challenge that WellPoint and others are confronting
is how to use the data they collect to increase adoption rates and reduce turnover,
Soper says. For example, if WellPoint had a concern about turnover among its nursing
population but also noticed that many of nurses who remained with the company took
advantage of its tuition reimbursement program, the company could do more to highlight
that offering to its nurses.
An increasing number of multinational companies are trying
to apply these statements on a global basis, but that comes with its own set of
challenges, Marcotte says.
"Companies need to consider doing this through a different
cultural lens," he says. "For example, how is stock option ownership perceived in
China?"
Employers also have to figure out if it makes sense to outline
what they offer as benefits given that in many countries, employees receive state-sponsored
benefits, Crawford says.
Finally, companies increasingly are using total reward statements
as a recruiting tool. Ten years ago, these statements were just for existing employees,
but companies today realize they can be a very effective way of luring talent, Crawford
says. The company is, after all, offering a new employee much more than just a paycheck.
"It makes a huge difference for a prospect that is being offered
a $50,000 salary to see that the actual total compensation is worth $70,000," he
says.
Workforce Management Online, July 2007 -- Register Now!
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