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Susan M. Heathfield

Employees Don't "Get" Benefits

By April 19, 2009

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Compensation is one of the least understood aspects of your company's people practices and policies. Employees do not comprehend the true cost of your compensation package.

Employers don't want employees to talk about compensation with each other, so compensation can take on an aura of mystique. Companies rarely advertise their pay scales, so it is difficult to obtain meaningful information for the jobs in your market. Yes, I know salary calculators and online resources exist, but the comparison is still difficult.

Even more of a mystery than compensation, though, is the cost and the value of your benefits. According to a survey conducted by the Charlton Consulting Group and analyzed and reported in the HR Daily Advisor, employees "estimate the cost of benefits pay to be 30 percent or less over and above pay. In fact, according to government statistics, the average cost of benefits is nearly half again that 43 percent of pay."

Employers need to recognize that this employee misperception probably exists in your company. The key to helping employees understand the true cost of the benefits you provide for them is education. You need to communicate to people, starting in their job offer letters, the value of your benefits package.

This message should be reinforced during new employee orientation. The only way you can capitalize on your benefits dollars invested in your employees is if your employees know the value of your investment in them. One way to address this ongoing need for education is to provide an annual benefits statement to each employee. Another is to provide annual training that describes and summarizes the value of each benefit.

A third method, one that will most effectively communicate the value of your benefits, is to schedule an annual benefits evening for employees and spouses during which you review the fine points and the value of your benefits package for the family. This will allow employee spouses to appreciate the value of your benefits package and provide easy, knowledgeable access to benefits.

Don't assume your employees comprehend the value of your benefits - they don't. It's your job to educate to make the most of your investment in your employees.

Resource added on 4-20-09: Take a look at the Workforce blog to see what concerns employees currently about their benefits. They are worried that employers will begin to pass on even more costs to employees. Some employers are noticing an increase in employees accessing benefits for costly medical procedures and filling prescriptions. About a third of employers have increased employees' cost for benefits, and more plan to do so.

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April 20, 2009 at 3:29 pm
(1) Marcy says:

A helpful salary trends tool.


April 21, 2009 at 12:04 pm
(2) kim says:

I created a total compensation for each employee within the company. it consisted of their salary, and then what benefits they had, what they paid compared to what the company pays for that employee and it is done with a pie chart. I then sent it to their homes and had a lot of good response to it. most don’t realize how much benefits are and our company because we are a non-profit doesn’t pay the highest, however our benefits are AWESOME!!!

May 12, 2009 at 8:04 am
(3) Veena Danny says:

Hi Kim,

Is it possible for you to email us what you have done or provide some more explanation wih eg. Will be a great help.

Best Regards,Veena :)

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