At its most basic, a total compensation statement should include:
- Statement of work arrangement and hours, for example “Full-time employee/ Regular work hours: Mon-Fri 8:30 a.m. to 5 p.m. with 1-hour lunch
- Statement of base compensation, including any increase implemented since the last total compensation statement
- Statement of bonus compensation, including conditions of payment (for example, at the firm’s discretion) and how amount will be calculated
- Salary/wages paid
- Bonus paid
- Mandatory employment-related taxes paid by employer (FICA, unemployment)
- List of paid holidays and wage value, if employee is hourly
- Number of personal days or hours, with wage value, if applicable
If you provide additional benefits, include those expenses:
- Medical insurance
- Disability insurance
- Life insurance
- Retirement benefits
- Training classes or college courses paid/provided by employer
- Non-cash compensation (gifts, travel, meals, etc.)
Deliver this report annually — usually in first quarter of the year, showing total compensation for the prior year. The total compensation statement should be at least a full page long to convey its importance and should be accompanied by a letter describing what it is, why you are providing the information and how to use it. Don’t skip this step! This is the expectation setting opportunity. Here’s a brief example:
We are pleased to provide you with your year 20XX personalized benefit statement. This statement summarizes the benefits and compensation you were eligible to receive from A-1 Financial Services during the 20XX calendar year. It also gives you the opportunity to review decisions you have made and can assist you in making plans for your future. Please review your statement carefully and keep it with your other important documents for future reference.
Advisors with just a few employees and relatively straightforward cash compensation structures should be able to assemble a basic total compensation statement. If you have a larger staff and a more robust benefits package, you may be able to enlist the help of your benefits provider, professional employment organization or payroll vendor to put these together.
Whether it’s one of our corporate employees or the single assistant in an advisor office, the reaction to a total compensation statement is usually the same: amazement at how those “little perks” can add up to a significant percentage of the employee’s actual pay — the national average is 42 cents for every dollar of salary or wages. An annual reminder of the actual numbers and the underlying expectations helps align your employees’ goals with your business goals, resulting in greater efficiency, profitability and satisfaction.