The Other 25% Of Compensation

It is estimated that employees’ total compensation is derived 75 percent from earnings (which is reflected in the weekly paycheck) and 25 percent from benefits. There is no weekly reminder, however, of the benefits. A smart employer will see to it that his employees and their families are reminded of this important additional 25 percent of compensation by a targeted, formal plan of benefits communication.

There are two forms of communication to the employee, the sophisticated, expensive approach or the practical, less expensive approach.

The sophisticated, highly technological approach utilizes expensive multi-page color brochures, interactive corporate Web sites and on-site benefit kiosks that explain and personalize the various benefits to each employee. This approach is appropriate for the jumbo companies we read about in Fortune and Forbes, such as IBM, Cisco, Dell and Citigroup. Having spent hundreds of millions of dollars to provide such benefits as life, health and dental insurance, these companies would not get cost-effective value nor proper return from their investment unless they communicated this important aspect of total compensation. They can, thereby, justify the costly process of utilizing advertising agencies or in-house art departments.

The well-respected and widely read trade journal Business Insurance annually devotes a complete magazine issue to effective employee benefits communication. It solicits submissions from corporate clients that illustrate how they have explained a current or new benefits program to their employees. A panel of communication experts judges the submissions and designates the winners. A dinner is held, the awards are distributed and many photographs are taken for subsequent publicity. The winners are proud that a panel of their peers has judged them to have most effectively communicated the understanding and value of their benefits to their employees.

If you are a smaller employer, however, perhaps with under 200 employees, the same principles of effective employee communication also apply, but on a less expensive and sophisticated basis.

What is suggested is that you, with the assistance of your human resource or benefits manager, prepare a single page summary of your Group Life Insurance Program. Then, similarly, prepare one for your Health Insurance Program, your Dental Program, your Vacation Policy and your 401K Program. You might distribute these sheets on a rotational, bi-weekly basis, perhaps along with your paychecks. If you conduct periodic employee safety meetings, for example, you might devote 10 minutes to discuss a particular benefit. Providing this information in smaller “bites” should promote employee discussion, understanding and appreciation.

If your principal means of communication with your employees is by computer, you might utilize the above approach by company e-mail.

To communicate a summary of your Employee Benefits Program, you might compile all of the reports into one folder and mail them to the employee’s home, where the spouse could also review them and retain them for future reference.

Twenty-five percent of your employees’ compensation is too important for you and your employees to ignore. If you implement your own “less sophisticated” benefits communication program, you might not win accolades in a national magazine, but, more important, you will be getting a better return on your employee benefits expenditures.

Gases and Welding Distributors Association
David E. Irving Meet the Author
GAWDA Group Life Insurance Consultant David E. Irving is based in Media, Pennsylvania. Members can reach him at 610-566-4851 and at