Currently, one in five American workers lives in a state where certain employers are held to pay transparency standards—a reality that means employers across the country need to consider not only how they handle discussions related to pay but also about total rewards.
Pay transparency is trending upward, as California and New York recently joined Colorado and Washington in requiring employers to post salary ranges with job descriptions.
“With that change, if an employee wants to compare their salary to what they might make at the same level at other companies the information is a quick Google search away,” says Brandon Weber, CEO at Nava, an employee benefits brokerage.
Weber notes that, in addition to being upfront about salary with current and potential employees, the legislative push for transparency means that employers also should be open about all details of a compensation package with workers. After all, he says, everyone knows what their salary is, but many have no idea of the true dollar value of their employee benefits.
See also: What California’s pay transparency law may mean for you
“Unsurprisingly, it’s often a big number, one that can amount to upwards of 20% of their total compensation,” Weber says. “When they don’t have that information, you run the risk of having employees greatly undervalue their compensation, which invariably leaves them feeling frustrated.”
And as more companies are open with their salary information, that could leave employees looking elsewhere solely for a higher dollar figure.
Weber recommends three steps every employer should take when reviewing total compensation with their employees:
- First, quantify the dollar value of the benefits you provide employees, from medical and dental all the way down to ancillary benefits. “Employees need to see this number,” he says.
- Second, show that number as a percentage of their overall compensation. So, employers could say, “These benefits account for x% of compensation beyond your salary,” Weber says. Also, give them the total number so they can see that an employer is contributing another $25,000 a year—or whatever the number may be—across different benefits as a percentage of their total compensation.
- Finally, whenever possible, consider benchmarking benefits offerings against those of similar companies. Assuming it is the case, an employer might say, “Other companies of our size typically contribute 75% of medical premiums for their employees’ families. We contribute 85%.”
“Of course, you’ll need to do the math to show exactly how many thousands of dollars a year this extra 10% puts into their pockets,” Weber notes. “Even that difference in premium coverage can amount to hundreds of dollars per paycheck.”
Smart employers will also highlight any benefits offered that aren’t common among the competition. For instance, perhaps an employer is one of a small number of companies in a specific market sector offering one or more “niche” benefits, such as fertility assistance, student loans or financial wellness benefits.
“In most cases, you’ll find that employees will give you credit for going beyond offering only medical and dental benefits,” Weber says. “It’s a great way to show them that you care about their wellbeing, and it also is helpful if you have to start operating in a more transparent salary scenario. Compensation clearly is not only about pay.”
Learn more about trends in total rewards during the upcoming Health & Benefits Leadership Conference, May 3-5 in Las Vegas. Click here for more information.