While many people know the reward of a hard day’s work goes well beyond a salary, an increasing number of employees don’t understand the real value of the total rewards they receive from their employer.
At the same time, employers are struggling to communicate the value of the benefits they offer. One way to improve this reach is by following the old refrain: show, don’t tell. Total rewards statements are visual tools that are designed to effectively communicate the financial value of what an employee is entitled to as part of their job.
At a fundamental level, the statements are easy and accessible places for employees to visually engage with the benefits of their labour, says Sarah Beech, chief executive officer of Arthur J. Gallagher and Co.’s Canadian benefits and human resources consulting division. “If you look at the most basic [definition] of a total rewards statement, it’s trying to put in context three key elements — salary, health benefits coverage and retirement options — that make up what the employer contributes financially on [an employee’s] behalf.”
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By the numbers
According to the 2024 Benefits Canada Healthcare Survey, effective benefits plan communication is on the decline. The survey found:
• 47% of members said they understand their plan extremely or very well, a slight drop from 51% in 2023 and 65% in 2018.
• 9% said they don’t understand their plan well, which increased among employees who felt their plan doesn’t meet their needs (21%) and those in poor mental (20%) or personal (19%) health.
• 33% of plan sponsors reported they’re boosting their communications efforts.
A total rewards statement typically includes base salary, bonuses or commissions, pension contributions, learning and development costs, health benefits and other costs or benefits available.
“When you’re thinking about [joining a new employer], . . . you have to take into consideration how much your benefits are worth [and] how much your retirement plans are worth, because that full package is what it is to be at a company,” says Beech.
Facilitating recruitment
These tools are evolving, she adds, by including more aspects of employees’ workplace perks, including paid time off, in-office benefits like drinks or snacks and even an organization’s philanthropic support.
Piecing all of these benefits together, the statements are used to describe an organization’s employee value proposition. “[It’s] a picture of what it’s like to be an employee with that company as opposed to programs in isolation. It’s connecting the dots for people because they don’t, inherently.”
The standardization of total rewards statements can also help recruitment tactics with many progressive employers using pie charts to simplify the highlights of a role within their organization, says Beech.
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Simplifying industry standards
In addition, total rewards statements can significantly simplify standard benefits for specific industries.
“Compensation can be complicated and total rewards statements just makes it easier to understand,” says Angela Splinter, chief executive officer at Trucking HR Canada.
The non-profit, which provides trucking companies with human resources services, launched a do-it-yourself guide on these statements in 2022. Since then, it has adapted the guide into a template document for anyone it works with to use. In the industry, driver compensation can become obtuse very quickly, she says, with wait and load times varying by company and differences in the hauls, as well as hybrid working models and some fleets even paying by mileage.
“When we articulate and communicate to this driver exactly what they’re getting, what their compensation looks like, they’re able to compare apples to apples, which they weren’t doing before.”
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Since driver retention severely impacts Canadian trucking companies, which typically rely on transient employees that move from fleet to fleet, a new, higher-paying job might seem more attractive at first, says Splinter. However, she adds, it can become even more attractive with a total rewards statement that clearly breaks down the traditional benefits, as well as everything else they get, from team barbecues to work boots.
“Employers that take this approach see a direct impact on driver retention in particular.”
Connecting with employees
Employers have offered a version of total rewards statements for around 20 years, says Beech, from flexible benefits enrolment packages to initiation booklets with pension information.
However, a more recent evolution of the tool is aiming to put the employee value proposition into perspective, she notes, and adding context to the financial elements an employee earns beyond a paycheque.
Read: The power of total rewards
One of its benefits is the visual aid component and how it translates the total value of working at a specific employer, says Beech, noting the adoption of total rewards statements is born out of a desire to better communicate to employees.
“Employers spend huge amounts of money on their employees and they’re realizing that ongoing communications, getting the hearts and minds of people on an ongoing basis, not just when they’re hired, is key to success in validating the expense and the effort in managing the plans.”
Bryan McGovern is an associate editor at Benefits Canada and the Canadian Investment Review.