Employee personal details
Total reward package at a glance
Summary chart
Summary table
Details of financial and non-financial rewards
Financial rewards description and composition
• Base pay
• Allowances
• Contingent pay
Benefits
• Tangible
• Non-tangible, including voluntary benefits
Table 14 – TRS Cover Letter
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In the introductory section, individuals’ personal data will be placed in order to
personalize the document and show that the statement has been tailored for the person
in question. Indeed, albeit not always employers can actually devise personalized
statements for each employee, the inclusion of the individuals’ personal details will be
perceived by recipients as a form of attention and care showed by the employer with
each employee. This perception will more effectively and successfully be induced if a
presentation and description of what total reward statements are will also be included in
the form of a covering letter. Whether the presentation should be signed by the business
CEO and the HR Director the impact will even be stronger and the document much more
likely to be carefully read and appreciated by employees.
The covering letter should also be considered as a way to establish, or rather, maintain
an open communication channel between employer and employees, so that this should
invariably be concluded with an invitation to contact the organization HR Function for
whatever type of query or additional information might be required.
Charts and tables definitely represent for employers the ideal tools to summarize the
overall reward package offered to employees and provide these with a clear and
comprehensive view of its worthiness. More in particular, pie charts are usually
considered the most suitable and effective tool to provide employees with an immediate
view of their overall reward package composition and express the significance and
relevance each component has vis-à-vis the others.
Table 15 – TRS Template 1
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A detailed enumeration and a brief description of the different components of the
financial reward package offered to employees can and have at this point to be showed
in the statements. The concise description included in each entry will turn to be useful in
order to remind employees in which way their basic pay and the amount associated with
contingent pay have been determined.
Table 16 – TRS Template 2
The list of benefits, including voluntary benefits, with the indication of their worthiness
will complete the statements. Also in this case, it would be appropriate to include in each
entry a brief outline explaining the advantage of which the employee actually benefits.
Whether an advantage should be extended to the individual’s family members, this will
be mentioned in the benefit outline. This description can definitely reveal to be useful in
order to remind employees that some of these benefits, especially when cafeteria
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benefits programmes have been put in place, have actually been chosen by the
employee as an option to other available forms of advantages.
Table 17 – TRS Template 3
It would be appropriate and certainly welcomed by employees, showing in the final
section of the statements a list of all of the printed and electronic documents produced
by the organization about the firm’s reward programmes, flexible benefits and total
reward statements. Ideally, for each document listed should also be provided a link
enabling employees to directly access and eventually download the document. In
addition to this option, employers should also provide for each document listed precise
details about how to eventually request a hard copy of the document and to whom.
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TRS implementation critical factors
Communication approach and strategy
Total reward statements are basically concerned with total reward communication, by
extension, they can be considered as a crucial element of total reward programmes
implementation. Though TRS represent an important means by which employers can
stress and emphasize the value of their total reward proposition, in order to be effective
total reward statements need to be supported by a specific and effective communication
programme themselves (Longo, 2011d).
To properly put the message across, employers should first and foremost identify the
most suitable communication strategy and approach, which have to be consistent with
the usual communication style used within the organization. Indeed, total reward
statements need to be coherent not only with the communication approach used within
the organization, but also with its “employer brand” (Ratcliffe and Evans, 2008).
Enabling employers to attaining an average 75/80 per cent employee utilisation
compared to the more common 25/40 per cent average, having recourse to a pre-
release communication strategy has revealed, in many cases, to be a very effective
method, (Ratcliffe and Evans, 2010). Advertisements, pop-ups, specific messages posted
in the corporate intranet, posters, newsletters, leaflets, memos, mails and similar tools
can effectively contribute to generate staff’s interest and draw individuals’ attention
towards this initiative.
When it comes to total reward statements communication acquires a remarkable role not
only to support their introduction, but also to stress the importance of their content. In
order to provide individuals with the necessary information they need to make informed
decisions for their future choices and avoid any possible form of mix-up, businesses need
to keep communication clear and simple, completely avoiding, in particular, any recourse
to jargon (Pearce, 2009).
As suggested by Silverman and Reilly (2003) employees should always be
knowledgeable at least about the essential mechanism of the benefits scheme in place;
TRS can indeed reveal to be the most suitable means to explain staff how benefits plans
are operated. Ultimately, employers can also decide to provide access to external
financial advisors or a dedicated helpline in order to offer staff more specific advice.
Clearly this would be a superb initiative, but it will obviously have a considerable
drawback in terms of cost.
Benefits valuation
There is broad consent on the critical importance that the correct evaluation of benefits
showed in TRS has for their successful implementation. All of the data and information
provided to each member of staff, hence, invariably need to be accurate and absolutely
reliable. Differently, the statements initiative will turn to be a massive waste of time and
resources, with the likely aftermath being employee loss of trust on the employer and
the HR function.
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Although, by and large, the TRS initiative may seem rather straightforward to implement,
benefits evaluation represents one of the trickiest decisions businesses need to make.
More specifically, employers have to decide if they intend to show in the statements
either the value each perk is likely to provide to the individuals concerned or the cost
faced by the firm to provide each of them, or both. Whether, for instance, an employee
would need to spend £500 for a season ticket enabling him to travel from home to work,
it is likely that the employer could offer the same ticket actually paying it £450
(depending on the number of season tickets bought and possibly on some other
variables).
According to Silverman and Reilly (2003), organizations usually decide to state in the
document the value of each perk in terms of the advantage they offer to employees (in
the example, £500), in that it is clearly associated with a higher value compared to the
cost actually faced by the employer (in the example £450), who can benefit of
favourable prices on account of buying a large number of each item or service. But the
Authors also highlight the circumstance that applying this benefits evaluation method
could give rise to dispute with employees and/or their representatives. In some
circumstances and depending on the different types of perquisites, the value each
employee associates with each of them can in fact be differently perceived. Individuals
close to their retirement age, for example, may very likely perceive as higher the value
associated with complimentary pension schemes and health insurance, whilst younger
people could perceive as less worth the value of these kinds of benefits. Yet, those
perquisites which can be enjoyed by employers with their family members would
possibly be perceived by working parents as having even more value than that these
objectively have (Longo, 2011d).
When considering the impact of the different perceptions employee may have of the data
showed in the statements, in term of both reliability and acceptance, employers should
be particularly careful; the risk being that of jeopardising the legitimacy of the overall
reward packages they offer. That is why businesses very often do prefer showing for
each item both the benefit value for the employee and the cost faced by the organization
to offer it. This would actually be an ultimate form of transparency which will surely
contribute to favour employees to be more objective when valuing their take-up.
Other Key factors
In addition to data accuracy, content personalisation, clear and simple communication
and a consistent data valuation method, there are other relevant factors which need to
be duly taken into consideration by employers when designing statements.
One of the things organizations need to completely avert, for instance, is to oversell
benefits (Ratcliffe and Evans, 2008). Employers should be careful to not include in
statements more than it is actually made available and offered. Yet, they have to
categorically avoid attributing to benefits, irrespective of the evaluation method used,
more than their actual value.
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Another pitfall business should avoid falling into is to overfill statements with figures
(Ratcliffe and Evans, 2008). Despite numbers and charts can definitely help employers to
provide a synthetic view of the statements content, their usage has to be appropriate
and proportionate to the intended objectives. A descriptive section explaining and
clarifying the meaning of the different charts and figures has invariably to be included.
An additional important decision employers should make, albeit apparently of secondary
importance, concern the determination of the number of pages the overall document
needs to contain and the different lengths statements have to reach according to the
different individuals to whom they are addressed (Ratcliffe and Evans, 2008). Depending
on the support chosen, that is, paper or electronic format, TRS total length and number
of pages definition, whether not considered from the outset, can give rise to problems
which could reveal to be not so simple and easy to overcome during the implementation
stage.
Once the standard layout has been arranged, reward professionals could prudently
decide to leave some spaces blank in the first instance in order not to change the overall
layout and number of pages in case of amendments. Nonetheless, decisions about the
best way to eventually fill these spaces need to be made at the outset and before
determining the final version of the statements.
Designing and implementation approaches
In order to design and implement total reward statements, employers have to use a
clear, structured approach. The method suggested by Lucas (2006) is formed by 6
different stages. During the first stage businesses have to complete the checklist of the
benefits offered by the organization to staff. Then, decisions about the statements
structure need to be taken. The third stage represents a fairly delicate phase; it is in fact
concerned with the definition of the evaluation method to be used to determine the value
of each item which will be showed into statements. At this stage, the statements content
and layout can be designed and developed. The fifth stage is concerned with one of the
most sensitive phases of the overall process, that is, data collection. Finally, everything
is ready to introduce and launch the total reward statements initiative.
Before carrying out the statements designing and implementation processes, a previous
analysis aiming to clearly highlight the business strategy and objectives and determine
how statements can actually support organizations to achieve these has to be considered
mandatory. This analysis is also of paramount importance in order to determine where
statements “sit in the broader reward context” (BDO, 2010).
Since statements are directly linked to the total reward programme in place within an
organization and, as such, also to the flexible and voluntary benefits schemes eventually
offered, TRS, after having been launched, need to be reviewed every time changes are
applied to these schemes.
Design, development, launch and maintenance are not the only activities associated with
issuing TRS. After having launched statements in fact employers should carry out an
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employee survey aiming to investigate employee perception of this tool (Ratcliffe and
Evans, 2008) and whether the intended objectives have actually been attained.
Employers will review statements according to the feedback received by their staff,
activating a “refine and refresh” stage which may lead to a re-issuing phase (Ratcliffe
and Evans, 2008).
This process, aiming to modify and eventually adapt statements according to employees
feedback, has actually to be considered part of the maintenance process itself, meaning
by that that it has to be fully considered as part of the overall process and as such be
carried out as a matter of course.
TRS and the public sector
Issuing total reward statements could appear to be a practice typical of private sector
organizations, but this is not actually always the case. In the UK three big local
authorities, namely the Buckinghamshire, Cambridgeshire and Hertfordshire councils
decided, during summer 2008, to join forces in order to pilot a project aiming to design
and implement total reward statements to be issued for 60,000 staff (Berry, 2008).
This should not come as a surprise, in that, although local governments reward packages
have always been undervalued and underestimated by staff, public sector employees
usually enjoy benefits such as pension, holiday and flexible working, whose value very
often overcomes that offered by private sector employers (Berry, 2008). That is actually
why in 2008 the UK’ Cabinet Office recommended to public bodies to have recourse to
TRS; the aim and objectives are clearly exactly the same as those pursued by private
sector organizations.
Total reward statements introduction can reveal to be particularly useful and effective
especially in periods when the salary increases granted to public sector staff are below
the inflation rate; fostering the value of the overall package offered to staff becomes,
especially under these circumstances, crucially important (Hibberd, 2008).
What next
By introducing statements, employers can also communicate to their staff the total
reward concept at the basis of their organization total reward mechanism. Employees
can gain a clear view and understanding of what benefits their employer offers to them
and of the cost and value of the perquisites they receive. Ultimately, by means of this
tool, employers can also attain the objective of clearly associating or integrating reward
and benefits (Lucas, 2006).
Gathering employee feedback, in order to eventually implement adjustments accordingly
and verify whether the intended objectives have actually been achieved, is extremely
important. But, after having introduced total reward statements, businesses also need to
analyse statements data in order to identify possible opportunities in terms of financial
savings, make changes in the benefits packages and eventually in the cafeteria benefits
schemes offered (or making decision about the introduction of this latter scheme, if not
yet existing within the organizations) (Lucas, 2006).
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TRS influence on attracting, retaining and engaging staff
Inasmuch as retaining valuable individuals is a difficult feat to achieve for employers in
whatever circumstances, in periods broadly characterized by belt tightening and
uncertainty attaining this objective may reveal even harder. Taking particular care with
effectively and properly communicating to each member of staff the value of the overall
reward package he/she receives is, hence, particularly important (KPMG, 2002). Since
during economic downturn and slowdown periods pay increases could be unlikely to be
offered or, even in the event these should, would not be as generous as these had been
during the previous years, properly communicating employees the worthiness of their
current reward packages could effectively help organizations to improve staff morale or
to soften the negative impact that gloomy economic periods can make on individuals
(NorthgateArinso, 2009).
Ensuring that employees truly understand and properly value each component of reward,
can reveal to be particularly useful in order to “developing or reinforcing a branding for
reward and benefits within an organization” (Ratcliffe and Evans, 2008). Additionally,
this awareness can effectively contribute to deter employees from leaving their current
employer just for a meagre basic salary increase and make individuals understand that
their organization really care about them. By comprehensively expressing the real value