If you thought pay transparency was a trend that would soon be forgotten about, you might be surprised to learn 17 states have now passed some form of pay transparency law. It seems inevitable that all employers will soon be sharing compensation information with their workforce and the general public either as a matter of regulation, best practices or as part of the war for talent.
Many state laws simply require job postings to include a salary range. Others, like Colorado’s Equal Pay for Equal Work Act, also require a “general description of all of the benefits and other compensation to be offered.” Smart and forward thinking employers are using total compensation statements to comply with these laws and to stand out in a tough job market.
Unemployment rates are back down to pre-COVID levels. There are more jobs than employees to fill them, and people are once again scrolling job boards and considering their options. The top reason employees are looking for a new job is to find higher pay elsewhere. A total compensation statement can help you keep your current talent and attract new talent by providing a more complete picture of compensation than salary alone.
What is a Total Compensation Statement?
Total compensation statements have been around for more than two decades, although you may be more familiar with its other names such as: “Total Rewards Statement,” “Employee Benefit Statement,” or “Hidden Paycheck Statement.”
Whatever name it goes by, the objective of this document is to clearly communicate to your employees everything you provide to them. This includes the company’s financial commitments beyond salary and insurance. That means 401(k) matching, vacation days, life insurance or a mobile stipend. It even lists everything else provided like free food and drink, volunteer hours, company swag, fitness center, and learning and development.
Why do employers go through the trouble of drafting a total reward statement? They will increase morale, maximize the perception of your offerings and improve your acquisition and retention numbers.
The War for Talent
Pay transparency is becoming a prerequisite to recruiting talent. Laws such as the New York City Human Rights Law and Colorado’s Equal Pay for Equal Work Act are making it a legal requirement in many states, but studies are finding job seekers also want this information.
But it’s not just a regulatory requirement. 79% of job seekers said they wanted at least some form of transparency while 32% said they wanted total transparency. More than two thirds (68%) said they would switch employers simply for greater pay transparency, even without an increase in pay.
Being open about compensation is the smart move, and perhaps the only one. After all, if you won’t share compensation information, your employees will.
Talking about salaries used to be considered taboo, but as millennials and Generation Z make up more and more of the workforce, things are starting to change. A nationwide Bankrate survey found more than 40% of employees aged 18 – 41 have shared their salary information with a coworker or other professional contact.
They are also talking about racial and gender pay gaps as well as disparities between what employers are paying for similar jobs in the same market. Instead of sitting back and not having a seat at the table, give your employees a tool to help them understand and speak about their full compensation. Give them a total compensation statement.
Pay Transparency is a Win-Win
With all the laws being passed to require some form of pay transparency, you might assume it is a bad thing for employers. It doesn’t have to be.
Yes, you may have fewer candidates apply for your job posting. You will also have fewer of the wrong candidates apply since many job seekers turn down a job offer when the pay is eventually revealed and it doesn’t meet their expectations. This will save your recruiting team time, energy and frustration.
Simply put, employees, both current and prospective, want more information about compensation at your company. These employee benefit statements can help them realize their compensation is much more than the dollar amount on their check and can improve job satisfaction and retention.
Instead of fighting pay transparency or dreading the day it becomes law in your state, start providing your employees with a total compensation statement now and show them how much you really value their contributions. Make pay transparency a strategy in your talent acquisition and retention efforts, and one that is effective for your organization.