Total reward statements outline the value of financial benefits, as well as perks with a less tangible value, says Nicola Sullivan
Total reward statements are documents which are used by employers to demonstrate the value of an employee’s total reward package in order to raise awareness of the value of the benefits they are entitled to or receive.
These statements outline the value of traditional benefits, such as pensions, salary and employee share schemes. But employers are becoming more aware of the importance of highlighting the value of other perks relating to training, health and wellbeing initiatives and subsidised refreshments to staff. Ben Wells, head of communications at Buck Consultants, explains that employers can demonstrate just how much they care for staff by communicating such additional benefits.
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When deciding exactly what to include within a total reward statement, however, employers should consider how far they want to go. Wells, for example, believes employers should not highlight every little thing like vouchers offering two-for-the-price-of-one deals. “If you imply [employees] should be grateful for it, the reaction would be negative.”
Employers should also ensure that they don’t falsely raise employees’ expectations by including general details of benefits they are not eligible for. Instead, each statement should be personalised to reflect individual employees’ packages.
Peter Waller, chairman of Benefex, says: “If they are not entitled to a company car, it would be crazy to include something like that,” he explains.
Employers must also choose whether they wish to demonstrate the value of an employee’s package retrospectively or project what they expect this to be over the coming year. “The total reward statement could be looking back at the previous year to inform employees of what they have gained, or, alternatively it could look forward, predicting the value of employee [reward] packages for the year ahead,” says Wells.
A further choice employers face is whether they wish to offer paper-based total reward statements or place these online for employees to access. Offering online statements, however, is more expensive than producing paper statements because of the extra consultancy work required for setting up the technology. Matt Waller, chief executive officer at Benefex, says: “There are pros and cons for both. Online can be real time and updated to reflect an employee’s current position. Offline is typically high impact as all of the personalised messages are pushed out in front of the target audience. However, they are static documents and therefore will go out of date.”
The cost of providing total reward statements will vary depending on the size of an organisation, the number of sets of terms and conditions, the format of delivery, the jurisdictions in which it is to be issued, and the accessibility and quality of data.
Organisations with between 200 and 300 employees should expect to spend up to around £9,000 on total reward statements. For larger organisations, that want to produce between 30,000 and 40,000 statements, the cost could amount to well into six figures. “Typically, there will be a one-off implementation cost and an ongoing cost per employee,” adds Waller.
Total reward statements can also be useful in the run up to implementing certain benefits schemes such as a flexible benefits plan. Communicating the value of an employee’s package beforehand can help to increase their appreciation of the scheme.
Product file: total reward statements
What is a total reward statement?
A total reward statement is a document used by employers to communicate the overall value of the rewards they offer to employees. Elements of reward such as base pay, benefits, training and work-life balance initiatives can be included on such a statement.
Where can employers get more information?
A number of management consultancies provide information on total reward statements.
Who are the main providers?
Benefex; Buck Consultants; Cerdian; Hay Group; Jelf Group; Motivano; Northgate HR; Personal Group; Staffcare; Strait Logics; Thomsons Online Benefits.