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Compensation Communication: It’s All in the Strategy

By Tom Starner | 3-min read

Employee compensation is a tricky business these days. Gone are the days when salary or hourly wage and basic health care benefits were enough to attract talent.

Today, total rewards is the new normal. Compensation and benefits are much more complex, especially with the growing demand for choice and flexibility by employees.

As the war for talent remains top of mind, delivering an attractive total rewards lineup is critical for creating employee satisfaction and retention. But simply offering great programs and rewards is not enough. Effectively communicating total rewards and compensation plans can ensure employee understand and value them.

Rebecca Shipley – principal of Denver-based Innovative Total Rewards, a boutique HR firm that specializes in total rewards, compensation and benefits – says that today the wider variety of programs employers build into their total rewards offerings (such as flexible work, telecommuting, 401(k), wellness, even pet insurance) need to be shared via an effective communication strategy.

“Total rewards are akin to the employee value proposition. For employers, it’s what we offer you to work here,” she says.

Shipley explains that employers who effectively communicate their compensation and total rewards programs are one big step ahead of the competition.

“Communicating total rewards effectively means it’s embedded in the culture,” she says. “In my experience, employees do so much better when they understand the why and the how of a total rewards/compensation program. They’re much less skeptical about where they work and more willing to get on board, to engage.”

Underestimating communication can prove costly

Employers can underestimate the amount of attention and effort that goes into the communication phase. In Shipley’s experience, creating and deploying a successful communication strategy can take as long as the actual design of a total rewards program.

For example: A well-designed comprehensive total rewards statement can be very effective for employers in the communication realm, though not all employers produce them.

“They can be super time-consuming and complex,” Shipley says. “And in order to be effective, they have to be personalized.”  In other words, a total rewards statement probably should not be a one-size-fits-all situation. For example, Baby Boomers, who are prone to have higher medical bills, might receive a total rewards statement that highlights the economic benefit of the company’s health care plan. Millennial employees might receive a total rewards statement that focuses on the value of the company’s personal time off policy in real dollars.

Shipley also adds that employers pay large sums for benefits or perks and employees may not even know about that fact without effective total rewards communication.

“Companies can be throwing money away,” she says, noting that building a successful total rewards experience often is expensive. “If you are going to offer a benefit—say, an employer match for a 401(k) plan—it is not cost-effective if employees are not aware it exists.”

How to do compensation communication correctly

Whether it’s by email, text, or social media, the smart compensation communication strategy is to do it all.

“Before you actually communicate, you should collect information from employees about what matters to them (e.g. their view on flexible work schedules or family leave). This is what I like to call ‘grassroots marketing’,” she says. ““If you proactively solicit employee input and then focus on the things that matter, they are likely to tell others,” she says. 

Use media tools like video and other digital content to spread the message and reach a dispersed workforce.  Have the CEO or the head of HR talk about the why and the how of the total rewards package. If practical, offer live Q&A sessions with benefits leaders and employees. Many times, employees will want to know more and appreciate a space to have questions answered. It’s also wise to continue offering documents like FAQs, which remain very popular, according to Shipley.

Shipley says HR should create communications targeted towards managers on how to have a conversation with employees about compensation. Training mangers and business leaders on total rewards is especially important because they often deliver the face-to-face employee conversations. If managers don’t get it right, the overall effort probably will be ineffective.

“Total rewards and especially compensation can be emotional topics,” says Shipley. “If you can equip your leaders to help employees understand the program, communication is working as designed.”

“Effectively communicating compensation to employees should rank among HR’s top strategies,” Shipley says. “It’s a critical part of any effective total rewards program – compensation, benefits, learning and training and culture. At the same time, it ensures that your organization is getting the maximum value for its compensation and benefits investments – a clear win-win.”