And what you don’t know can actually hurt you: one of your employees may wrongly choose another employer. For example, a higher wage in cash might be the decisive factor. But if the employee is losing out in terms of pension plans, insurance or other conditions, their financial well-being can suffer long-term. In the meantime, you also have to make the extra effort to attract a new candidate, which is no simple matter in a tight labour market. So: clear information about the various salary components is an absolute must in the battle for the best talent.
Communicating about remuneration: 5 tips-Reading time: 4 Minutes
Remuneration: a major driver for happiness or – alternatively – stress. A recent study by HR service provider SD Worx shows that the remuneration package in most European countries is the number one priority for staying (or starting) with an employer. Yet, knowledge about and appreciation of the salary package strongly influences financial well-being.
Tip 1: inform your employees about your remuneration package
Remuneration consists of wages in cash, often combined with a range of additional benefits, each of which falls under a separate regulation or legal framework. This complexity makes it difficult for your employees to calculate or make decisions about the value of their total compensation package. The choice for more or fewer vacation days, for example, has an impact not only on the remuneration itself, but also on the pension. An average employee is aware of about 60 to 70% of his total compensation package, according to research. The rest is a blind spot.
Tip 2: explain your remuneration policy
Insight into total compensation is one thing. But with a list of remuneration components alone, your employees cannot correctly assess the added value. So, make the link between your rewards strategy on the one hand, and the added value of each benefit on the other. This way, your people understand exactly what they are getting, but also why.
Tip 3: ask your employees for feedback
Communicating about compensation is a two-way street. You put together remuneration packages, but what do your people think of that? You may be pumping a lot of money into benefits that not so many people appreciate or that have limited added value for your employees.
Many larger organisations regularly check in with their employees through surveys. But managers can always simply inquire directly during the employee evaluation meeting. In any case, the feedback can serve as a guide to better tailor your compensation packages to the needs of your people. With greater appreciation and more engagement as a result.
Tip 4: respond to individual needs
Depending on their stage in life and living situation, each employee has specific needs. In terms of remuneration in cash or mobility solutions (e.g., company car or bicycle, public transport pass), but also with regard to work-life balance, personal development, (informal) family care and so on. By personalising the remuneration package, you can optimally respond to these needs and once again increase the appreciation of the salary package.
On top of that come the big milestones in life, such as marriage, birth or retirement. Offering special benefits in response to such an event adds a personal touch to the remuneration package. If you offer these benefits, take the milestone in question as an opportunity to communicate this explicitly with your employee.
Tip 5: get everyone involved
Because it’s not so much the number of benefits or the salary that has an impact on employee satisfaction, but clear communication about it. This is shown by a study conducted by Vlerick Business School.
Your marketing and communication people can undoubtedly do their part to promote the remuneration strategy. By involving the recipients of the message early on, you significantly increase the chance of success.
Finally, one more thing: almost every organisation today recognises the importance of communicating about remuneration, according to research. The results show a twofold increase in this awareness compared to 2018, offering solid evidence that attitudes have evolved in this area. Now it’s important to involve management and all supervisors, in addition to HR. Because talking about remuneration remains a shared responsibility.
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