What are total reward statements?
Total reward statements are personalised communications that show employees the total value of their compensation package beyond just salary. This can help people to recognise the entire value of the employment deal beyond their pay, making total reward statements a potentially powerful tool in communicating the employee value proposition (EVP). Total reward statements can also help to provide greater clarity and transparency around reward, useful given eight in 10 employees underestimate the value of their total reward by up to 30%, according to Benefex.
Total reward statements are most often updated yearly. An employee will receive one annually either on paper or increasingly digitally via an online platform. The contents and composition of a total reward statement will vary from organisation to organisation, but they will typically include sections covering the different areas of the overall benefits package, such as salary and bonuses, pension, insurance provision, benefits, allowances such as company car allowance, and employee discounts. They may also include non-financial benefits such as health and wellbeing, learning and development programmes, flexible-working opportunities and recognition awards.
What are the cost implications?
Cost will be bespoke to each organisation and will depend on the complexity of reward arrangements across the employee base, given the need for personalisation. Cost drivers include the number of employees, whether statements need to be translated into multiple languages and the number of different data sources required to produce a comprehensive statement. With total reward statements increasingly presented digitally, the cost of providing them is usually tied up with the reward or flexible benefits platform and may also be connected to the provision of other services. The need to collect and consolidate data from a number of different sources to populate the statement accurately can require a hefty time and resource cost on the part of the HR team.
Are there any tax or legal issues?
Total reward statements are simply an employee communication around pay and benefits and, therefore, should not incur any tax or legal issues. However, it is worth bearing in mind that they do contain sensitive pay information, so data privacy and security should be considered.
What are the current market trends or developments?
The most obvious trend, as with so much else in HR and employee benefits, is the move to digital. While total reward statements have been in the market for a long time, statements are now far more likely to be delivered via an online platform, allowing for a slicker and more personalised form of communication. And while many total reward statements are still provided on an annual basis, increasingly regular data gathering can allow employers to provide a more timely snapshot of total reward for staff, even offering a view of real-time data around benefits.
In terms of communications, Aon reports greater use of personalised video as employers try to make more of an impact, often in a strategic drive to boost take-up and engagement around benefits.
Another trend is extending the scope of what is included in the statement from purely financial benefits to cover wider and non-financial perks, such as career development opportunities, wellbeing programmes and paid time off. Employers are increasingly including more information on funded learning and development in total reward statements, effectively repositioning total reward as total investment, according to Benefex.
The presentation of the entire EVP means total reward statements can and are being used to woo potential candidates as part of the talent attraction and recruitment process, highlighting the value of the entire package on offer beyond just salary.
With pay transparency legislation continuing to evolve in many markets globally, more employers are considering adding pay transparency data into their total reward communications, according to Willis Towers Watson's (WTW) Pay transparency survey, published in October 2023.
Who are the main providers and what types of schemes do they offer?
The main providers of total reward statements tend to be benefit platform providers such as Benefex, Reward Gateway/Edenred, Perkbox Vivup and Personal Group, which can include total reward statements as part of their client offering. For example, Benefex can provide fully tailored total reward statements via its global benefits technology platform OneHub, using data in any format to produce a total reward statement in company branding. Reward Gateway/Edenred’s total reward statement provision is completely customisable and includes information on salary sacrifice benefits, insurance and pension, discount savings, reward and recognition awards and non-monetary benefits.
Many broader HR management systems, such as Workday and Oracle, also include a total reward view as part of their solution, but often tend to be less flexible compared to what specialist benefits providers are able to offer. Consultants such as WTW also offer total rewards solutions.
