Is pay for work a form of communication? Absolutely! It is a message that tells the employee how much his work is worth to the employer. The problem is that if the employer does not help the employee to understand the relationship between work input and earnings, this can lead to misunderstandings and ultimately to leaving the company.

What an employee receives in the company - both in material terms and in terms of other benefits - gives meaning to his or her relationship with the employer in question. Therefore, employee satisfaction with work and long-term stay in the company will only be possible if the employee feels needed, valued and properly remunerated.

As it becomes increasingly difficult to attract and retain the most valuable employees, it is important that the employer develops and applies a compensation and benefit system that is understandable to employees. Such a system should be consistent with the strategic goals of the company, so it is important that it should reward the efforts of employees to the greatest extent, which translates into the success of the company. Transparency is also necessary here, so that the employee is aware of what actions and results are most desirable, and thus the best rewarded.

This is not only about salaries and bonuses, but the financial elements of wages are and will always be the most important from the point of view of employees. However, the value of less obvious benefits, such as the value of training, typical benefits in the form of vouchers, discounts, passes, or completely non-financial rewards such as longer holidays or the possibility of working remotely for a certain number of days in a month, is often underestimated in the company's everyday life.

Meanwhile, it is in the interest of the employer that the employee is aware of all the benefits provided by employment in a given company and actively contribute to the achievement of the objectives of the organization.

What is Compensation and Benefit Statement?

Employees like bonuses and benefits, but often underestimate their true value, and very rarely link their workload to the benefits they receive. And yet for effective motivation it is extremely important that the employee feels that the stronger he or she gets involved in the company's affairs, the more the employer will appreciate and reward his or her contribution.

That is why it is so important for the employee to know that the received allowances (e.g. passes) or even intangible prizes (e.g. better parking space), first of all, result from their authentic contribution to the company's successes, secondly, they have a real value, thirdly, they are not accidental. So, for example, that the employer does not distribute passes on fitness because a nearby club offered them for free, but because the company with conviction decided to take care of the condition of its employees and spent a specific budget for this purpose. And since the company paid for the available benefits with real money, in order to appreciate the specific employees, the awareness of such benefits in the eyes of the employee will grow.

But how is an employee supposed to know about this? The way to provide concise and legible information is a document called "Compensation and Benefit Statement". This is a report that shows (often in a graphically attractive form) the employer's expenses per employee during the year. That document should include not only information on salaries paid, but also data on bonuses, awards and non-financial benefits.

Well prepared Compensation and Benefit Statement contains information about all benefits received by the employee, such as medical packages, insurance, completed training, use of company cars, phones for private purposes, learning a foreign language and even about benefits difficult to convert into money, such as access to a company car park or flexible working time. The report should, to the extent possible, indicate the financial value of individual benefits.

Transparent, complete and understandable information from the employer makes the employee aware that the benefits he has received over the course of the year far outweigh the salary itself. This allows us to appreciate both the benefits received and the employer's involvement in the development of employees and in building good relations.

- During my professional work so far, the best Compensation and Benefit Statemets has been successfully implemented in Anglo-Saxon countries, however, it seems that now also in Poland more and more companies are ready for it. They have good systems, benefit packages, order. They are only paralysed by the fear of full transparency and the fear that Polish workers are still not ready for it. I think that this will slowly change - says Piotr Cwalina, partner in WNCL consulting company.

Benefits of transparency

Transparent Compensation and Benefit Statement is an important element of building the employer's image within the organization. But the benefits of employer branding are just one of many reasons why it is worthwhile to inform employees about the benefits and their value.

It is worth noting that today it is difficult to recruit good employees and the costs of rotation are getting higher and higher. Leaving a specialist can cost an additional 20-30% of a person's annual salary for a given position. That is why it is worth taking actions that will make an employee think twice before they give their notice. Compensation and Benefit Statement is such a tool.

Thanks to the report, the employee realizes that when comparing the conditions he has in the current company and the benefits he could receive after a possible change of job, he should take into account much more components than the basic salary. Will the new employer be willing to invest as much in training? Will his benefits have a similar value? Will he be entitled to parking or lunch surcharges in the new company? As a result, the employee will have to take into account many factors that are most often overlooked in similar considerations.

In addition, the mere fact that the employer provides such reports may be an argument in favour of giving him greater trust than another company, especially when the latter does not conduct such a transparent financial policy. And nowadays it's not a standard at all.

According to the Pay Scale 2018 report, which concerns surveys conducted in the United States and Canada in 2017, only 24% of employees surveyed believe that payroll processes in their companies are transparent and 21% believe that they are fair. It can therefore be assumed that when such a situation occurs, employees will be able to appreciate the employer.

Another benefit may be greater involvement in work for a company that applies a transparent remuneration system and is able to inform about it. Motivation is increasing, morale of employees is improving. A positive effect will also be a better atmosphere in the company and more efficient communication.

Strategic approach to remuneration

Piotr Cwalina points out that Compensation and Benefit Statement may be a very useful tool for HR departments, but its effectiveness will depend on how "arranged" the whole system of remuneration and benefits will be.

- It may turn out that the report will reveal any imperfections or even absurdities of the current system. For example, it may turn out that the amount of benefits received does not depend at all on the contribution to the success of companies or that it is not known what the benefits and their value depend on - emphasizes the WNCL partner.

Therefore, the basis should be a strategic approach to the Compensation & Benefits system. First, it is necessary to determine which initiatives and achievements of employees are the most important from the employer's point of view (which will justify linking them with remuneration), which talents are the most valuable for the company, what needs of the company should be implemented in the first place. Then consider possible ways to support desired behaviours, develop talents, invest in and reward employees.

Compensation and Benefit Statement is only the last element - the report allows to translate strategic goals of the company into the language of benefits. The employee is thus given feedback on whether his or her effort is focused on the right aspects of work and on how much the employer supports those objectives on which the employee has focused over the last year. As a result, the report is an element of dialogue with the employee on the set and achieved objectives and the costs incurred.

So it is not just about making salaries public and getting employees to compare their salaries. The essence of the Compensation and Benefit Statement is to make the employee aware of how the remuneration relates to the prospects for his position - both in terms of wages and achievable objectives.

Compensation and Benefit Statement shows the employee:

• how much the company has invested in it over the course of the year,
• what extra-material support and benefits he received,
• which competences are key (and thus most appreciated) from the point of view of the company's strategy,
• in which direction the employee should develop in order to be able to count on support and appreciation from the employer.

Thanks to this approach, the company gains a conscious employee who feels treated honestly and seriously. In such a situation, the possible departure from a company with a lower level of transparency will probably appear as a risky decision.

- Transparency of the system, clear rules, significantly increase the involvement of employees, and thus their motivation - emphasizes Piotr Cwalina.

On the other hand, we have employees who are not fully aware of how much they actually earn or are unable to determine how their earnings relate to their achievements. Such persons will certainly be more likely to leave the company than those who have gained adequate knowledge and awareness.