The Financial Component - Online Recruitment Magazine Feature

By Paula Santonocito

Money may not be the most important aspect of a job for all workers, but in surveys it consistently ranks among the top factors influencing employment. Whatís more, surveys show compensation figures heavily in job satisfaction.

Base salary, however, is only one part of the earnings equation. Total compensation takes into account a number of categories, including health care benefits that have tangible dollar values.

The challenge for organizations is how to communicate to employees what they truly earn.

Why bother? The marketplace is driving--indeed almost mandating--this kind of conversation. Increased competition for candidates and the need to retain workers are cause to look at the financial component in a different light--and present compensation in a whole new way.

Looking at numbers
Employees have always been interested in how their salaries compare. In the old days, conversations with friends and family members along with reviews of help-wanted newspaper ads would provide points of comparison. Now, as with so many areas, the Internet has brought pay information to a new level.

Online tools like Salary.comís Salary Wizard and Salary Expertís various salary calculators allow individuals to hone in on earnings information.

Using Salary.comís Salary Wizard, individuals and employers can get an inside look at market pay for a wide range of jobs by geographic locale. Similarly, Salary Expertís tools focus on positions by location.

But base pay isnít the only information Salary.com and Salary Expert provide. Recognizing that total financial compensation is more complex, both companies supply detail. Salary Expertís products vary, but its free Executive Comp Calculator provides separate totals for bonus and benefits information, showing each as a percentage of salary.

Salary.com, on the other hand, offers specifics for each position, presented in two slightly different formats, one for individuals and employers. Both groups can access the information via the companyís free signature tool, the Salary Wizard.

After entering a position title and a zip code, an individual is presented with four categories: base pay, bonuses, benefits, and paycheck. The benefits category includes Social Security, 401k/403b, disability, health care, pension, and time off. The paycheck category details deductions and shows what a person can expect in terms of take-home pay.

An employer using the Salary Wizard taps into a customized version called the HR Salary Wizard, which also furnishes information about base pay and bonuses, and allows for company customization.

The interest in this kind of information shouldnít be underestimated. Consider that Salary.com has 7,000 corporate subscribers, which equates to 10 million employees. The company offers an array of products that target both employers and individuals. Its Personal Salary Report, for example, is aimed at helping job seekers find out what theyíre worth.

Itís safe to say that such salary tools have significantly changed the employment landscape. Theyíve given employers a wider window on the marketplace. Employees too are more aware of what jobs pay.

Thanks to these tools, the value of benefits is also beginning to be communicated, at least in a general sense. But each employerís offerings are different, and often an employer offers a variety of compensation packages, which makes a case for customized earnings statements.

Personalizing pay
TotalRewards Software, formerly BCG Interactive, has been creating total compensation statements for employers since 1991. In the early days, the company prepared personalized booklets that showed its client organizationsí employees their total compensation.

For example, in addition to $50,000 in salary, a personalized booklet might have shown an employee that s/he earned $12,000 to $15,000 in other categories. The term that was once use, thatís fallen out of favor, is ìhidden paycheck,î says Ray OíDonnell, President of TotalRewards Software. Todayís term is total compensation.

The terminology has changed, and technology now allows for online documents, but the concept is the same. Organizations can offer employees, as well as candidates, personalized, total compensation statements through an on-demand software solution TotalRewards calls TotalCompBuilder, available at www.totalcompbuilder.com.

Statements are available online or in print, and are customizable. Employers can utilize the software themselves, or work with TotalRewards Software staff to tailor it to their requirements. Two editions of the product and several different modules are available.

Retaining and recruiting employees
The company released TotalCompBuilder less than a year ago and already has 165 employers utilizing the solution.

ìMost employers use it as a retention tool,î says OíDonnell. But TotalRewards plans to put additional focus on how the product can be used as recruitment tool: Companies can provide potential employees with total compensation statements.

Itís not a new idea for TotalRewards. About three years ago it introduced a product called eRecruiter Online, which OíDonnell says had the same purpose. Yet, at that time, the marketplace didnít warrant TotalRewards statements from a recruitment standpoint.



What a difference a few years makes. Driven by the competition for candidates and the rising cost of benefits, employers are more interested in communicating total compensation to both current and potential employees.

OíDonnell points out that thereís good reason not to leave ìhidden payî hidden: The Bureau of Labor Statistics puts the average monthly benefit expense for an employee at $1240.63. At more than $14,000 per year, itís a big number. ìItís the second-largest number behind direct pay,î he says.

If a company is not at least doing the minimum when it comes to conveying total compensation, it is doing itself a disservice, OíDonnell says.

As a proponent of conveying total compensation, OíDonnell wants to spread the word about the value of sharing information with employees and candidates. Accordingly, TotalRewards Software offers a free version of its software at its FreeTotalCompStatements website, www.freeTCS.com. The no-frills edition is designed to allow companies to generate up to about a dozen statements, while getting a feel for how sharing total compensation can facilitate retention and/or recruitment. Several small employers actually continue to rely on the free version, which OíDonnell indicates has no expiration date.

Feedback on TotalRewardsí customized total compensation statements has been positive. From an employee standpoint, OíDonnell finds there is kind of a wow factor. ìIn most cases, employees would say, ëI never realized how much youíd done for me.í They are appreciative and thankful,î he says.

From an employer standpoint, sharing this information allows an organization to promote what it offers, and get more mileage from compensation packages. ìThereís kind of a disconnect between the perceived use of these benefits relative to the perceived value of these benefits,î OíDonnell says.

There is a huge value in communicating total offerings, according to OíDonnell. But he stresses the importance of presenting the information properly.

ìTraditionally these have been look-back statements. I think companies have to be a little bit more proactive, currently and forward,î he explains. Statements should also reflect what employees are entitled to, not what they used. Otherwise, with the exception of unionized environments, the tool can benefit almost any organization with more than 50 employees that offers benefits.

ìEvery employee should have a clear understanding of their total compensation,î OíDonnell says.

Paula Santonocito is a journalist specializing in workforce management issues. She is the author of more than 500 articles on a wide range of topics, including online recruitment, which she has covered since the early days of Web-based employment advertising and candidate sourcing. In addition to serving as features editor of Online Recruitment Magazineís North American edition, she also serves as AIRS News editor, overseeing news content for the global recruitment training and technology solutions company at www.airsdirectory.com. Articles by Paula Santonocito are featured in many global and domestic publications and information outlets, including HRWire, a publication to which she regularly contributes. She can be reached at psantonocito@yahoo.com.