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Published on Sep 11
When you’re recruiting, it’s essential that your applicants understand the full value of the compensation package that you offer. From annual salary to health benefits and vacation time, helping your potential employees see the investment that you are making in them can help you land top talent, even if the salary you offer isn’t as high as your competition. Providing a total compensation statement (TCS) is a transparent way for you to demonstrate the complete value of your payment package and help potential employees better understand your commitment to them.
While some companies already issue a TCS to their current employees annually, this report can also be a vital tool to up your recruitment game. A TCS lays out clearly and simply the entire value of a potential employee’s compensation package, including wages, indirect compensation, and the employer-paid portion of the benefits you offer. Think of it as showing your recruits the big picture of the package you’re offering.
TCS’s are not legally required, but helping your applicants get a better understanding of the full value of your offering can help you attract better talent. Additionally, knowing the full value can help increase the morale and loyalty of both new recruits and existing employees. These statements serve as a simple and extremely useful recruitment and retention tool.
While your prospective employees know the value of the salary you’re offering, the indirect compensation (especially the benefits portion) is often referred to as the “hidden paycheck”. Without the employer’s contribution to benefit premiums or matching programs, the full costs of these programs could be the employee’s responsibility. A TCS demonstrates to your applicants the true dollar value of the benefits your company offers.
What should I include?
To give your employees the best understanding of their true earnings, your TCS should include all of the monetary costs of compensation by the employer. In addition to all financial earnings, such as gross wages, bonuses or commissions, a TCS should also include the employer-paid portion of retirement plan contributions, insurance premiums, paid time off, and any other benefits offered by the company.
To help employees get a handle on the true cost of compensation and how it’s broken up, you should divide your TCS into separate sections for direct compensation, indirect compensation for taxes, and indirect compensation for benefits. Your TCS should include:
- Direct Compensation
- Base pay, including overtime for current employees
- Commission, bonuses, and incentive pay potential or actual
- Indirect Compensation: Taxes
- Social security tax
- Unemployment tax
- Workers’ compensation insurance
- Indirect Compensation: Benefits
- Health, dental, and vision insurance
- Life and disability insurance
- Health Savings Accounts (HSA)
- Retirement plan contributions (401k)
- Paid time off allowances, and accrued paid time off for current employees
- Educational assistance
- Relocation expenses
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