What is a Total Rewards Statement (TRS)?
A total reward statement will calculate, assemble and visualise the total value of an employee’s compensation package – including everything above basic salary, for example:
Total Rewards Statements are often provided annually by employers to their employees. They are often presented as a printed document or digitally for the employee to access online. A Total Reward Statement does not replace an employee’s monthly payslip or annual salary summary.
How are Total Reward Statements used in the workplace?
Employers opt to use Total Rewards Statements as part of effective and sustainable employee communication strategies. The statements themselves can be used for various different functions at the workplace to great effect, such as:
Why is it important to show an employee’s total rewards, compensation and benefits?
A Total Reward Statement (also known as an employee compensation statement) can offer an employee a better understanding of what they earn, which benefits they are entitled to and which pensions and insurances their employer provides them as part of their employment. When an employee is only able to see part of this offering, the true value of the employer’s rewards package becomes lost. This leads to, what we call, a greater compensation gap.
What happens when an employee does not understand their total rewards package?
At Benify, we recently unearthed that as many as 80% of all employees continue to significantly underestimate their employer’s total rewards offering – meaning that fewer employees will take advantage of any benefit, subsidy or insurance policy which may be available to them. Incredibly, the average employee will only see 67% of their total compensation – a statistic which is higher in the private sector than it is in the public sector.
Benify’s recent compensation gap study also identified clear disparities across sector, age and geographical location. For example, those who work within salary and rewards, such as HR and payroll professionals, will correctly value their total compensation and rewards packages by up to 37% more than employees from other sectors. This leads more and more employees to resort to other options, such as online compensation calculators, in order to understand their total compensation.
How to calculate an employee’s total salary and rewards
This is the tricky part. Employers often find that calculating and creating a Total Rewards Statement for each employee can be a time-consuming and arduous process – one which eats away at a lot of business time and expense.
To create an effective overview of total employee compensation and rewards – an employer must factor in a number of different variables. These variables may be specific to that particular employer, or they may be set and regulated through a national infrastructure (i.e. government tax legislation).
In addition to gross-salary, a Total Reward Statement must factor in:
Digitalising Total Rewards through data automation
Once an employer has created a model which factors in all of the relevant salary and rewards ingredients, it then becomes easier for the employer to automate this process to a broader audience. This becomes a simpler and cheaper alternative – meaning that the employer can duplicate each Total Rewards Statement, however with different variables depending on the employee.
What happens when an employee does not understand his or her total rewards package?
At Benify, we recently unearthed that as many as 80% of all employees underestimate their employer’s investment in them. This means that few employees understand that their compensation includes much more than just salary. This lower level of understanding results in employees not participating in workplace benefits, subsidies or insurance policies. As a result, they can:
How can an employer calculate an employee’s Total Rewards Statement?
Employers often find that calculating and creating a Total Rewards Statement for each employee to be a time consuming and arduous process – one which eats away valuable resources. To create an accurate overview of what an employee earns for contributing his or her talents, an employer must factor in a number of different variables. These variables may be specific to that particular employer or may be set and regulated through a national infrastructure (i.e. government tax legislation) or both. In addition to gross salary, an employee Total Reward Statement must factor in:
How can an employer communicate the total compensation effectively?
It is important to communicate the total compensation packages to employees through a Total Rewards Statement. Our research has shown that when asked to report on the actual value of their total reward, employees estimated only 67% of the actual figures. This is to a great extent a question of information, since employees within Human Resources demonstrated significantly better knowledge of their total compensation packages compared to others. But information must be displayed clearly, too. Employers need to build the statement and then visualize the value of their investment over salary. Our tip is to ensure the Total Rewards Statement is produced through an automated model so that each employee can be educated time and again.