If you read nothing else, read this…
- Employers must be sure of their reasons for using total reward statements (TRS) and how they should be sent out.
- Statements can be tailored to groups of employees or individuals.
- Any errors in a statement can undermine an employer’s hard work.
Pay rises are few and far between at present, so there has never been a better time for employers to ensure employees are aware of, and value, their total reward package.
Carole Hathaway, rewards practice leader Europe, the Middle East and Africa (EMEA) at Towers Watson, says: “Our research suggests employees do not understand the quantum of
the different rewards they get or do not understand the programmes that are in place.”
Total reward statements (TRS) can help to show staff the true value of their package. The Chartered Institute of Personnel and Development/Benefex reward management survey, published in May, found that one in five employers provide TRSs, and organisations with 10,000 staff or more are the most likely to send out statements.
Hathaway adds: “In recent years, total reward statements have been taken up by organisations because it is a great opportunity to help staff understand the value of the items in their package and help them think more broadly, not just about base pay, and see how their total package is made up.”
To be effective, a total reward statement must engage an employee and not just be a list of benefits that quickly gets fi led in a drawer or even the bin.
Employee Benfits asked experts for their top tips on getting statements right.
1. Consider the rationale
Before launching total reward statements, employers should consider what they want to achieve, because this will affect how the statements are presented and sent out.
Matt Waller, chief executive at Benefex, says: “Is it just that you want people to understand their benefits package better, or is it that you want employee engagement scores to go up in the next employee survey and for people to say they understand reward better?”
If an employer wants to be seen by its staff as family-friendly or encouraging work-life balance, then relevant benefits can be flagged up on the statement, says Waller. Such benefits may not cost the most, but giving them greater weight will emphasise the company culture.
2 Consider delivery options
Delivering statements online allows employers to provide more information, with click-through options. It also allows them to update the statement when changes to an employee’s reward package occur. But online delivery can have its drawbacks.
Stuart Hyland, head of reward consulting at Hay Group UK, says: “Five years ago, it was all about doing everything online, but I have seen more employers move to paper. When you put something online, you need a trigger event to prompt people to look online and to remember to access the information. Many people are not comfortable accessing information at work because they feel there is a lack of privacy and some firms do not have the facility to allow people to access statements at home.”
The CIPD/Benefex survey showed over 80% of respondents said they used paper-based statements, while 23.7% used online versions.
Paper statements may be the most popular, but providing extra information can result in a very large document. Hyland adds: “Some organisations try to do too much on a reward statement and it ends up like a bit of a book.”
He suggests employers distil the reward components into headlines and use the statement as a summary that directs employees to further information.
3 Keep it personal
A reward statement will always include certain benefits and rewards for all staff, but it can also be personalised to highlight perks relevant to the employee at their life stage.
The first item most people look at on a statement is still base salary and bonuses, to check these match what they expected.
Benefex’s Waller says: “The big-ticket items are quite emotive for people. A pension is a lot of money, so people tend to focus on that, as well as things like cars and holidays.”
Organisations should then look at each individual and the benefits that will appeal most to them. If an employee has just started a family, childcare vouchers may be of interest, or if they are nearing retirement, pension scheme details should be highlighted.
Employers should also take into account the type of work an employee is doing and tailor the statement to reflect what will be most important in their circumstances.
Towers Watson’s Hathaway says: “If staff are in a high-pressure sales environment, the TRS is likely to focus on cash rewards.”
Total reward statements are also not one-size-fits-all. They change depending on the salary and circumstances of each employee, so it is important not to ignore smaller perks that might cost less than pensions or insurances, but will still be valued by certain employees.
Matthew Gregson, managing consultant at Thomsons Online Benefits, says: “With lower-paid staff, typically the emphasis is on cash and things that can help with day-to-day living costs. If an employer offers discount portals or things that it may not assign a value to from a total-reward perspective, including these in statements reminds employees of the qualitative benefits they are getting.”
4. Avoid mistakes
It may seem like an obvious piece of advice, but before statements are sent out to employees, they should be checked for any possible mistakes.
Gregson says: “The first thing people look at on a total reward statement is mistakes. If employers get something wrong, staff will punish them for it. If it is going to be very complicated to design the statement and if they cannot necessarily trust the information, I would think carefully about including that element because the second an employee sees something inaccurate, the employer will really struggle to use it as a motivation tool.”
Language is another issue to consider, especially for organisations that have a workforce spread across the globe.
Hay Group’s Hyland says one employer in the Netherlands with several thousand employees based in the UK sent out its total reward statements in Dutch. Meanwhile, many UK-based employers send out statements in English to employees in other countries because English is the company language, says Hyland. But he suggests international organisations should consider translating statements into the local language to make them more accessible.
5 Total communication
Employers should consider making statements part of a total reward communication strategy carried out throughout the year to ensure they are making the right impact on employees.
Hyland says: “Employers cannot just send out a total reward statement on an annual basis and expect it to answer all employees’ questions. You have to support it with more frequent, even generic, communication. Total reward statements, when they come through, should be a summary document. You do not want any surprises in there for the employee.”
Richard Morgan, director of consultancy services at Vebnet, says some employers issue their main reward statements online, but to encourage employees to log on and look at their package in detail, they produce a generic flyer that is sent to the employee at work or at home detailing their main benefits and where to get more information
CASE STUDY: PRUDENTIAL
Employees wanted online statements
Financial services provider Prudential UK and Europe changed from paper-based total reward statements (TRS) for its 2,000 employees to an online version after feedback from its annual employee engagement survey showed that staff wanted a more visual approach to total reward information. The organisation moved the total reward statements online in 2010 at the same time as it relaunched its online flexible benefits scheme.
In 2011, Prudential added a mid-year online total reward statement to give staff a real-time view of their package after the salary and bonus review process in April.
The statements are backed up by ‘Reward on the road’ roadshows where employees have access to the firm’s reward team and in-house benefits providers to obtain information on their package. Simon Moffatt, head of reward at Prudential, says: “Our total reward statements are an integral part of how we communicate our benefits to our [employees].
“The feedback [from staff] about the online statements has been very positive.”
