Total Reward Statements - what's all the fuss about? (02/2009)
Total Reward Statements (TRS) continue to be one of the hot topics in the HR world, but what are they all about and do they actually deliver anything to employers?
A definition of TRS
TRS aims to show each employee the full value of their rewards package by providing a single statement detailing all the benefits they receive and illustrating that basic salary is only part of the rewards package.
Why implement TRS?
In so doing, Total Reward Statements present employees with the full value of their package, thereby enhancing engagement and motivation. Indeed, for those who may be reviewing the jobs market, TRS will provide the basis for a genuine comparison of the full remuneration package. The theory goes that if employees truly understand and recognise the value of their rewards they will be less likely to jump ship in return for modest increases in basic pay, especially when the rest of the benefits package might be inferior. TRS can clearly help to improve staff retention levels.
Which rewards/benefits?
Statements can group rewards and benefits into different categories: e.g.
- Total cash
- Wealth creation opportunities such as share options, sharesave schemes etc
- Benefits
Further breakdowns can then be given to show the makeup of each category, while the use of charts can provide quick and easily digestible summaries. A sample TRS is shown below.
Some companies stretch Total Reward Statements well beyond the obvious cash and benefits elements and into areas such as training provision, health and wellbeing services, subsidised refreshments, discount schemes and vouchers etc.
Care must be taken to personalise the TRS. Employees will not be impressed by Statements that serve to highlight benefits for which they are not eligible, such as company cars or private medical insurance!
TRS can also be used to highlight benefits not being taken up by employees. For example, employer pension contributions may be on offer subject to the employee also making a contribution. Employees need to be reminded that they are missing out on these benefits and are not realising the full value of the rewards on offer.
Retrospective or Prospective?
A retrospective statement has the advantage of being a certain and complete (subject to input accuracy of course) record of a previous period's rewards, but it won't show the effect of recent salary or benefits enhancements. On the other hand, prospective statements, especially where they include variable elements such as commissions, bonuses or share awards, are indicative. Clearly both can have a role to play though employers will usually choose one or other for fear of complicating the communications.
How to deliver TRS
Many early adopters of TRS did so with paper-based statements. However, most are now moving to online solutions. These have the advantage of being available in real-time, updated frequently and easily accessible. Indeed, many TRS systems come as modules within benefits management platforms such as Mybenefits[1]. These platforms can be operated on a standalone basis or may be integrated with existing HR systems.
Communication, communication, communication
It's not just a matter of producing Total Reward Statements. They need to be launched with an effective communications campaign, explaining the statement and what it's telling the employee. Subsequent annual statements will also need to be heralded with suitable messaging.
And finally...
Total Rewards Statements are no longer the preserve of large corporations. They have a part to play for all progressive businesses whatever their size. For further information on TRS, how they could benefit your business and how to deliver them, speak to Aspira.
Total Reward Statement for {Name}, 2009
Your reward package is currently worth £45,128.88
Annual Rewards Breakdown
Annual remuneration package
| Basic Salary | £34,672.95 |
| Bonus | £1,500.00 |
| Profit-related pay | £500.00 |
| Benefits funded by employer | £8,027.50 |
| Benefits funded through salary sacrifice contribution | £327.05 |
| Estimated tax & NI savings as a result of salary sacrifice contributions | £101.38 |
| Total: | £45,128.88 |
Benefit details
| Benefit Description |
Employer Contribution |
Employee Contribution |
Salary Sacrifice |
| Car Allowance | £3,467.30 | £0.00 | £0.00 |
| Critical Illness - Standard Plan | £0.00 | £28.04 | £0.00 |
| Dental Insurance | £0.00 | £46.80 | £0.00 |
| Employee Health Screen | £0.00 | £0.00 | £209.04 |
| Holiday Trading | £0.00 | £0.00 | £118.01 |
| Independent Financial Advice | £0.00 | £396.00 | £0.00 |
| Life Assurance | £823.20 | £0.00 | £0.00 |
| Personal Accident Insurance | £0.00 | £36.00 | £0.00 |
| Private Medical Insurance | £237.00 | £0.00 | £0.00 |
| Company Money Purchase Pension Scheme - Active | £3,500.00 | £2,100.00 | £0.00 |
| Totals: | £8,027.50 | £2,606.84 | £327.05 |
Please note that all contribution figures are expressed as gross amounts.
Derek Miles
Managing Director, Aspira Corporate Solutions LLP
February 2009
[1] Aspira partners AEGON Benefit Solutions in bringing Mybenefits to its corporate client base. For further information, visit our website or contact Charles Keirl
| Attachment | Size |
|---|---|
| TRS what's all the fuss about.pdf | 292.9 KB |
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