Everything You Need to Know About Total Compensation Statements

Discover the true worth of your compensation with Total Compensation Statements. Explore hidden benefits, improve retention, and enhance employee satisfaction.

It’s quite common that employees only take salary into consideration when thinking about compensation. Your benefits package might be substantial yet employees may not fully understand the total value of the compensation they receive. These might include “hidden benefits”, which are usually non-monetary, like healthcare, paid vacation days, and many others.

According to this report, the value of employer-paid benefits in private industries in 2017 was 30.5 percent of the average worker’s total salary. This means an employee perceives his compensation to be only two-thirds its actual value. To show the true value of their compensation package, businesses provide total compensation statements to all employees with the benefits factored in.

What is a Total compensation statement?

A Total Compensation Statement is a comprehensive report provided by employers to their employees, delineating the entirety of their remuneration and benefits package in a detailed manner. This statement surpasses the mere base salary or hourly wage and encompasses all facets of compensation, including but not limited to performance bonuses, commissions, stock grants, employer contributions to retirement plans, health insurance coverage, paid time off, and additional workplace perks or benefits.

The primary objective of a Total Compensation Statement is to furnish employees with a transparent and comprehensive view of the monetary and non-monetary value they accrue through their employment. It serves to elucidate the investment made by the employer in the employee's overall financial stability, health and wellness, and work-life equilibrium. These statements play a pivotal role in fostering employee awareness and appreciation for the entirety of their compensation package, extending beyond the basic salary. For employers, Total Compensation Statements can be instrumental in recruitment, talent retention, and enhancing overall job satisfaction. In essence, these statements are a valuable tool for both employers and employees to gain a nuanced understanding and recognition of the holistic compensation structure associated with a given position.

Why are total compensation statements important?

Total compensation statements serve a critical role in fostering transparency and clarity regarding employees' overall remuneration packages. By detailing not only base salaries but also various components like bonuses, incentives, health benefits, retirement contributions, and other perks, these statements empower employees to understand the true value of their compensation. This transparency can significantly boost employee morale and job satisfaction, as it provides a comprehensive view of their financial well-being and underscores their employer's commitment to their financial security and well-being.

Moreover, total compensation statements benefit employers by helping them effectively communicate the value they provide to their workforce. In a competitive job market, these statements can be powerful tools for talent retention and attraction, as they demonstrate a commitment to fair and comprehensive compensation. Improved communication around compensation also leads to more engaged and motivated employees, as they feel better informed and valued by their organization. Additionally, these statements can aid in compliance with labor laws and regulations, ensuring that compensation practices align with legal requirements, which is crucial for avoiding legal issues and maintaining a positive employer-employee relationship. In essence, total compensation statements play a pivotal role in promoting transparency, trust, and satisfaction within an organization while also assisting in recruitment, retention, and legal compliance efforts.

Helps employees understand their contributions

According to employee engagement expert Leigh Branham, “There is no more emotionally charged issue for employees than what they are paid for their contributions. What we make doesn’t just pay the bills—it measures our worth in the most material way.” The total compensation statement empowers employees by giving them a clear picture of their compensation and helping them understand the extent to which the organization has invested in them.

Increases retention and loyalty

Knowing the full value of their compensation can boost employee morale and loyalty. Total compensation statements can be powerful retention tools.  In fact, CEB research shows that improving total rewards communication can lead to a 50% decrease in turnover risk.

Improves employee performance

Providing these statements are also beneficial for encouraging high performance because they reiterate the ways in which top-performing employees are recognized for their contributions. When employees feel that their efforts are appreciated, they may be more inclined to contribute their best efforts to the company continuously.

Also Read: Building a  High-Performing Team Through Employee Performance Management

What should you include in the total compensation statement?

Total compensation statements provide a complete break down of all aspects of the job’s benefits. It includes the monetary equivalent of all forms of compensation from the employer. The more detailed your statement is the more beneficial it is.

The TCS consists of two major sections–direct and indirect compensation. Direct compensation includes the base salary and other extra financial compensation like incentives and bonuses. Indirect compensation includes the dollar value of the employer’s contribution to taxes and other benefits. This summary is often referred to as the hidden paycheck.

The following are the components of a typical total rewards statement:

  • Base Salary/Wages
  • Bonuses and commissions
  • Paid time off
  • Health/Dental insurance
  • Retirement funds
  • Tax contributions
  • Stock options
  • Perks like child daycare, gym membership, commute passes, etc.

Also Read: Components of Total  Rewards | Uncovering The Key Elements of a Comprehensive Total Rewards  Package

Tips for creating effective total rewards statements

Here are some useful tips to keep in mind when creating total compensation statements:

  • Make it visually appealing with charts and graphs
  • Provide comparison with market data
  • Ensure all the data is accurate
  • Don’t double count line items–it’s quite easy to add paid time off on top of base salary
  • Consider adding net benefit amounts i.e. take into account the expenses incurred by the employees for any particular benefit
  • Only add the benefits employees are eligible for

Challenges in creating total compensation statements

PayScale’s 2018 Compensation Best Practices Report says 40 percent of top-performing companies are likely to use total compensation statements, compared to 36% of typical companies. If total compensations were so effective then why are a lot of companies not doing them?

Employee dissatisfaction

One of the main reasons companies refrain from creating total reward statements is because they feel employees might not be satisfied with the benefits they receive. The statement makes it easy for the workforce to compare it with peers as well as market standards.

But, these statements are actually doorways to open communication and career path conversations. If employees feel their earning potential is limited at your company, and not at par with the market standards, it’s critical you explain why that’s the case.

Accuracy of data

Another reason companies avoid these statements is in fear of giving inaccurate data. Accuracy of data is pivotal when it comes to creating any payroll-related statements. Also, the monetary value of the benefits changes with time and your statements need to reflect those.

If employees feel the data provided is not accurate, it may erode their trust in your organization. There might be benefits they are either not entitled to use or indifferent. In such cases, the statement might seem like a ploy to artificially inflate their compensation.

More paperwork

This is one of the most common reasons for organizations not handing out these statements. Creating total compensation statements for all employees can be a lot of work and can take weeks to process.

How can Compport help?

Total compensation statements are crucial–but creating them manually isn’t the best use of your time or your skills.

Our sophisticated platform offers a comprehensive solution to facilitate transparent communication of your employees' complete compensation packages, ultimately strengthening employee loyalty and retention. The distinct advantage of our system lies in its efficiency and simplicity, saving you significant time and effort. Unlike other software solutions in the market, Compport streamlines the process into four straightforward steps:

  1. Data Upload: Begin by uploading your employee compensation data securely into our system.
  2. Template Selection: Access our extensive library of total rewards statement templates or tailor one to meet your specific needs, setting us apart from other software options that may have limited template choices.
  3. Statement Generation: Our platform simplifies the statement generation process, ensuring accuracy and completeness. Some other software alternatives may lack the same level of user-friendliness and flexibility.
  4. Digital Distribution: With a single click, effortlessly distribute the statements to your entire workforce digitally, differentiating us from more complex and time-consuming alternatives.

While there are other software options available for total compensation statements, Compport's intuitive interface and extensive template library make the process seamless, enabling you to provide your employees with a clear view of their total compensation.


In Conclusion, total compensation statements are vital in helping employees understand the true value of their compensation, going beyond just their base salary to include benefits and perks. They boost morale, increase retention, and enhance job performance. For employers, these statements aid in recruitment and compliance with labor laws. While there may be challenges, technology can streamline the process, making it efficient and beneficial for all.

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Frequently Asked Question(FAQs)

1. What is total compensation? 

Total compensation refers to the complete package of rewards and benefits that an employee receives from their employer in exchange for their work and services. It encompasses not only the base salary or hourly wage but also includes various forms of monetary and non-monetary compensation. This comprehensive approach is designed to attract and retain talent while motivating employees to perform at their best. In addition to the base salary, total compensation may include bonuses, commissions, stock options, profit-sharing, and performance-based incentives. Non-monetary components can consist of health and retirement benefits, paid time off, employee perks like gym memberships or tuition assistance, and any other forms of compensation or recognition provided by the employer. Total compensation is a crucial concept for both employees and employers, as it reflects the overall value an employee receives for their contributions to the organization, helping to create a competitive and motivating work environment. It is often used in compensation discussions, negotiations, and comparisons within the job market and industry.

2. What are you looking for in total compensation?

When considering total compensation, individuals typically seek a comprehensive package that goes beyond just their base salary. Total compensation encompasses various elements that contribute to an employee's overall financial well-being and job satisfaction. Firstly, a competitive base salary is fundamental, providing a reliable income to cover essential living expenses. However, people also look for additional benefits such as performance-based bonuses or commissions, as they provide an opportunity to earn more based on their contributions and achievements. Health and wellness benefits, including medical, dental, and vision insurance, are highly valued, as they help ensure the employee's physical and mental well-being. Retirement plans, like 401(k) contributions and employer matching, are crucial for long-term financial security. Other perks, such as stock options or equity grants, can align an employee's interests with the company's success. Work-life balance initiatives, such as flexible hours or remote work options, contribute to overall job satisfaction. Finally, professional development opportunities, including tuition reimbursement or ongoing training, are attractive, as they allow individuals to enhance their skills and advance their careers. In essence, individuals seek a well-rounded total compensation package that not only recognizes their current contributions but also supports their financial goals and career growth while promoting a healthy work-life balance.

3. What is the definition of a total compensation plan

A total compensation plan refers to a comprehensive approach that organizations use to outline and communicate the entirety of an employee's rewards and benefits package for their work within the company. It encompasses not only the base salary or hourly wage but also includes all additional forms of compensation and benefits provided to the employee, such as bonuses, commissions, stock options, retirement contributions, healthcare benefits, and other perks. The goal of a total compensation plan is to provide a clear and transparent overview of the financial and non-financial rewards an employee receives for their contributions to the organization. By presenting this information comprehensively, it helps attract and retain talent, motivate employees, and ensure that they understand and appreciate the full value of their compensation beyond just their basic salary. Total compensation plans are crucial for both employees and employers to foster a mutually beneficial and sustainable employment relationship.

4. Which statements reflect dynamic equilibrium of an ecosystem

Dynamic equilibrium is evident in ecological succession, a gradual process of species turnover and adaptation to changing conditions, which ultimately results in a diverse and stable community. This balanced interplay of ecological processes ensures that the ecosystem can withstand disturbances and environmental changes while persisting over time. Dynamic equilibrium exemplifies nature's ability to self-regulate and sustain itself, emphasizing the intricate and interconnected relationships that drive the ecological harmony essential for the survival of all organisms within the ecosystem.

5. What portion of total compensation do employee benefit packages run

The portion of total compensation allocated to employee benefit packages can vary significantly depending on the employer, industry, and the specific benefits offered. On average, employee benefits typically constitute a substantial portion of an employee's total compensation package, often accounting for around 30% to 40% of the total. However, it's important to note that this percentage can fluctuate widely. Certain industries, such as technology or finance, may offer more extensive and costly benefits like health insurance, retirement plans, and stock options, which can push the portion of total compensation allocated to benefits higher.

Find out how Compport can help you manage all your Pay Transparency process, book a demo today!

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