The total compensation statement: a powerful tool in your HR toolbox

Published on: June 1, 2022
Subjects:  Total compensation

The labour market has changed dramatically in recent years, forcing organizations to get creative about how they attract and retain talent. This challenge is even more acute for HR professionals at small and medium sized businesses, who have to wear many hats and acquire the right tools to do their job, with limited resources. This means good decision-making is critical.

One tool that HR professionals can use is a total compensation statement. While total compensation statements are not new, employers often have questions about them, such as: Are they actually useful? What information should be included? How can we start using them without investing an excessive amount of time, effort or money?

The idea of giving your employees a total compensation statement may seem daunting, but there are many benefits to doing so and putting them together doesn’t have to be a complicated endeavour. Total compensation statements can be a great way to help your organization achieve its recruitment and retention goals, but before you start thinking about implementing them, your organization should consider how transparent it is willing to be and have some sort of compensation structure in place.

What is a total compensation statement?

A total compensation statement is a personalized document that summarizes the monetary and non monetary benefits that an employee receives from the organization each year. It’s a way for the employer to communicate key messages about the organization’s values and strategic objectives, and serves as a powerful marketing tool to promote the company’s culture and values through its compensation package. It provides greater transparency, which builds employee trust and provides an additional opportunity for managers to communicate and create a dialogue with their employees. 

Creating an effective total compensation statement

Something we always recommend to our clients is to take their industry, competition, workforce characteristics, culture, values, and (most importantly) their organization’s goals into consideration when developing any kind of compensation program or tool. This certainly applies to total compensation statements, which can be relatively simple to create as long as you stick to the essentials. Let’s break it down.

1. Define your primary objective, and design your total compensation statement around that objective:

  • Want to highlight your organization’s investment in employee well being? Draw attention to your health and safety, work/life balance and health care programs.
  • Are growth and skill building a major aspect of your organization’s culture? Focus on your training and recognition programs, reimbursement program for tuition and professional membership dues, and global mobility policy.
  • Looking for employees who share your values of community and social engagement? Emphasize your paid social outings and volunteering days.

2. Think about your target audience:

The information included in your total compensation statement should be tailored to your employees’ profile. The characteristics of your workforce, especially the types of jobs they hold and their demographics, may inform some of your decisions.

3. Make a list of all the components of your total compensation package (base pay, variable pay, employee benefits, and other perks) and determine:

  • Which components are meaningful and unique;
  • Which components you have the data and resources to easily include in the total compensation statement.

4. Decide what is appropriate and feasible for you in terms of the content, design, format (print or digital), frequency of distribution, means of delivery and production cost of your total compensation statements, and meet with your organization’s leadership to get their approval. For the total compensation statement to be of value, management must have a shared vision of what the statement is meant to communicate and how. 

5. Create a total compensation statement template that can be customized for each employee:

  • The statement should fit onto one page and be visually appealing, light on text with a few graphics. You can include graphs and charts, but keep it simple and focus on the essentials: your compensation philosophy, the monetary and non monetary benefits provided in the past year, and any new developments for the coming year.
  • Do not include contributions to government programs and other costs that the employer is required to pay (QPP, EI, CNESST, etc.).

6. Decide who will be responsible for distributing the total compensation statements to the employees (HR or management) and when they should be distributed (typically when communicating pay raises). Take the time to ensure whoever is placed in charge of the statements has the training and tools they need to distribute the statements in a consistent manner and answer any questions about them.

7. Review your total compensation statement annually and update it to align with your objectives. Your business priorities will change over time, as so will your employees’ priorities. If your total compensation statement hasn’t been changed in a decade, you’ve likely missed out on opportunities to boost your employer brand. That said, make sure your total compensation statements are provided consistently and on a regular basis. Try not to put them on the backburner if your organization is undergoing restructuring or organizational change. In fact, the more opportunities you take to communicate and create a dialogue with your employees, the more likely they are to feel a sense of belonging in your workplace.

8. Keep in mind that total compensation statements can also be an effective recruitment tool. Create a statement template that your managers can use during the hiring process to show the value of your total compensation package and attract top talent.

Key takeaways

The competition to recruit and retain skilled workers is fierce right now, which makes it more important than ever to communicate with your employees and make sure they understand the full value of the benefits they receive from your organization. A total compensation statement can be quite simple to put together, and the pros far outweigh the cons.


Anick Turcotte, Senior Consultant

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