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Employee Compensation and Benefits

Autor:   •  September 18, 2017  •  2,592 Words (11 Pages)  •  328 Views

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Once a benefits plan is created, how does an employer get “bang for their buck?” Employees need to understand the costs associated with providing benefits. When employees are asked what their employers are spending on their benefits packages, they typically only account for about 10 – 25 percent of the actual employer expenditures. The Bureau of Labor Statistics states that most employer’s benefits plans cost about 30% of the employees’ total compensation. This is too large an amount to be left unmentioned. Employers who are providing robust benefits packages, and even those that are less robust will want to communicate that actual value of these plans. By showing employees the values of their benefits plans, employers are creating a trusing work environment through open lines of communication that could help to alleviate turnover.

One of the best ways to share this information with employees is with an annual benefits statement. These types of statements are beneficial for both the employer and the employee. Since employees rarely realize the dollar figure that employers pay for their benefits, employers are able to take credit for this hidden paycheck. In addition, employees may see that they are under utilizing a benefit that is being provided for them. For example, if the employer is contributing matching funds to a retirement plan and the employee is not contributing the maximum amount, the employee is not receiving the full benefit that they could be receiving. Although employees make contribution decisions independently, seeing the amount they are leaving behind may prompt them to increase contributions.

Benefits statements also allow employees to better understand which benefits are taxable and which are pre-tax. They also can help with regards to cost sharing of benefits. With the cost of benefits, especially health benefits, constantly on the rise, many employers also increase employee contributions. While increased cost to the employee may be met with resistance, if employees see what the employer’s portion of benefit cost, they may feel differently. The amount of information that an employer can share on a benefits statement is limitless. This type of communication with employees is a powerful retention tool that employers should utilize.

Some benefits may not be listed on the benefits statement, but are important to remember. Company picnics and holiday parties are benefits that create a work atmosphere where employees feel loyalty. Providing the availability of payroll direct deposit, computer purchasing assistance, employee discount programs and employee assistance plans are low or no cost benefits that employees value.

Another benefit that the employer needs to create that may help to avert some unwanted turnover is creating a team atmosphere. Team building motivates employees in a positive manner that while their individual accomplishments are important, collectively they can achieve greatness. Not every employee will be self motivated enough to strive for a bigger or better position, but in the confines of a team many employees flourish. Employees feel a sense of belonging and this will stop many from looking to move to a new position.

Establishing a team is not a one-time event, but an ongoing affair. In order for team members to have positive “buy-in”, leaders need to empower them to be a part of the process. While leaders can establish the purpose, team members who are actively involved in setting the agenda and objectives will have more motivation to be part of the process. Team members can work together to create an agenda and design a follow-up plan. During the team building process, it may be a good idea to have a non-team member take a look at the plan. This person can give feedback to help the team refine their mission. Being a part of a team creates loyalty to the employer and thus reduces turnover.

This loyalty can come from positive motivation, which happens when employees take ownership in the process. Employees who are actively involved in team building activities feel they have more control over the processes that are put in place and thus are more likely to give positive feedback regarding workplace activities. By involving employees in developing teams, employers are empowering them and letting them know that they believe in them. This is a powerful tool in creating positive attitudes and work environments. Employees who have positive feelings about their work environment are less likely to leave.

Another benefit that employers may provide is a recognition program. Day to day recognition of the little things help to develop a base line of trust. This type of recognition is simple, easy to do and can be done formally or informally. It can be as simple as a few words of thanks or a written note. This type of positive reinforcement is usually inexpensive but the rewards can be immense.

A step up from the day to day could be an “Above and Beyond” award. This type of reward would be handled more formally than the day to day and could entail a more public announcement of the individual’s achievement. There should be a measurable criterion for evaluation so that it does not come across as a favoritism award.

Career recognition rewards are given for accomplishments such as length of service. This type of award provides a spotlight for all employees and will engage employees to feel they are a part of the team. This positive feedback when handled in a personal manner can result in higher employee retention and improved productivity. Employers should also highlight events that employees were involved in that have helped the company to achieve its goals.

Employers need to look at their benefit offerings on at least an annual basis to be sure that they are keeping up with the market and being competitive. Employees and potential employees will look at the provided benefits and compare to other employers. In today’s information age, employees are able to search employers information on the internet. There are many websites that employees and former employees rate employers. Employers with rich benefits plans who have created a sense of loyalty and trust through recognition, training and team work should expect to receive positive reviews which will be a great tool for recruitment purposes. Rich benefits plans, which include both hard benefits, like insurance and retirement plans and soft benefits like training, recognition and teamwork can help an employer to reduce turnover.


Scorza, J. (2011, April 1). Benefits Can Boost Employee Loyalty . Retrieved December 1, 2014, from



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