How to Improve Compensation Strategy with a Total Compensation Calculator

Labor costs, which include employee compensation, benefits, and related employer payroll taxes, are a huge business expense, so it’s critical to get your compensation strategy right to benefit employees and to ensure your company spends wisely and efficiently.

Having a competitive compensation strategy doesn’t mean throwing more money or incentives at candidates and employees. A complete approach to compensation includes proactively identifying the sweet spot where your company’s needs and an individual’s goals align.

Failing to establish an effective compensation strategy could result in your company facing low employee morale, higher costs due to inefficiencies, and ultimately cause you to lose top talent to competitors who optimize their strategy.

Read on to learn how a total compensation calculator can help you accurately measure, plan, and communicate the full value of your offers. Try it now to demonstrate your commitment to your employees and discover how a benefits platform can improve your overall compensation strategy.

How to use a total compensation calculator

Salary negotiations are one of the trickiest parts of HR. You’ve got to balance your management team’s goals and expectations with those of your candidates and employees.

On top of that, your short-term decisions have to set you up to achieve long-term goals around pay equity and your total compensation strategy. Our Total Compensation Calculator is perfect in these situations. Here are some ways you can use it to optimize the compensation strategy in your own organization:

Offers for new employees

Clearly display the total value of an offer to a candidate throughout onboarding. Giving a new hire a breakdown of all that’s included in their compensation package will help paint the whole picture of what they’re getting and how they’ll get compensated.

Negotiations with existing employees

Get on the same page with employees when it’s time for their performance reviews or any time salary comes up. A total compensation calculator can help you align with employees so they feel their needs are heard and they’re fairly compensated.

Reviews with executive teams

Next time your company considers switching insurers or shaking up its benefits stack, use a total compensation calculator to get an easy, accurate comparison of your options. If there’s one thing executives value, it’s information that helps make strategic decisions easier.

Sharing perspective on hidden perks

In a shaky labor market, there may not be room in the budget to give everyone a raise. An individual may only look at their salary and forget all the other ways they’re being “paid.” The total compensation calculator will help you explain those hidden forms of compensation. For example, if your company covers 85% of its employees’ health insurance premiums, that’s something they don’t have to pay for out-of-pocket.

The Total Compensation Calculator from BambooHR provides calculations for health insurance benefits including vision, medical, and dental, as well as HSA/FSA contributions. We also included other health-promoting perks, such as mental health and fitness stipends, professional development allowances, and tuition reimbursements .

What is a total compensation strategy?

A compensation strategy is a business’ approach to compensating employees through pay and benefits. It helps companies attract and retain top talent, while also aligning with business goals. An effective compensation package should be fair and competitive, providing a source of motivation for employees to do their jobs to high standard.

Companies should aim to offer all employees a comprehensive compensation package that provides more than just their salary but also includes useful employee benefits that contribute to overall job satisfaction and performance and personal wellbeing.

Why you need a total compensation calculator

It’s important for businesses to keep up with the changing dynamics of the modern workforce. Money matters—and that’s likely to always be the case—but some employees are willing to take a salary cut if it means gaining certain benefits. In fact, a recent BambooHR Compensation report revealed that employees value compensation beyond their regular paycheck.

In fact, 63% of respondents claim they’d take a pay cut for specific perks:

• 28%–4-day week
• 26%–More time off
• 23%–401k match
• 23%–Better health insurance
• 21%–Remote work availability

Looking at these numbers in the context of the current labor climate, it’s clear that HR teams must shift their approach to compensation packages if they want to offer the kinds of compensation workers really want. That’s where our Total Compensation Calculator comes in. It can help you ensure your compensation plan aligns with employee preferences and current market trends.

How can a benefits platform improve overall compensation strategy?

t’s a frustrating reality: all the thoughtful benefits your company provides might be a mystery to your people. In fact, research shows that 86% of employees are confused about their benefits and 50% of employees don’t understand them at all, leading to wasted time, higher costs, and missed opportunities to impress.

So, how can a benefits platform improve your overall compensation strategy? By shining a light on those often-overlooked—but valuable—perks, you can communicate the true value of your total offer, transforming a confused employee into an empowered one.

How to measure the impact of personalized compensation plans

Setting up a compensation strategy is only half the job—you also need to invest time into measuring its impact. After all, how useful it is for your employees is what really matters.

Companies are actively coming up with more individualized ways to round out their total compensation approach. This helps to boost the effectiveness of compensation packages for all employees—from those with long tenure to parents who require more flexibility in their roles. Personalized ideas include:

• Providing childcare for employees
• Dependent care benefits
• Monthly bonuses and additional earned time off for high-turnover roles
• Encouraging flexibility in work hours and location
• Supplementing air conditioning or other housing expenses
• Expanding parental leave policies
• Developing generous equity or stock option packages

Personalizing compensation can also help in your recruiting efforts. Creating programs to recruit and re-train employees who have a gap in their work history (such as stay-at-home parents, people with arrests or convictions, and retirees) helps you diversify your workforce and tap new sources of talent. These internship-like programs, also referred to as returnships, are an excellent way to demonstrate your organization’s commitment to employee development while gaining valuable experience and skills in those you hire.

Once you’ve implemented more personalized compensation plans, you’ll need to monitor how your employees respond to them and whether they find them beneficial. There are a few ways to do this:

• Employee surveys: Create surveys to gather information on how employees feel about their compensation packages and whether they meet their unique needs.

• Retention and turnover rates: This provides a great insight into the effectiveness of your compensation strategy. A reduction in turnover after introducing individualized plans suggests a positive impact. You could even add some compensation-related questions to exit interviews to gather further sentiment.

• Performance metrics: Has there been any changes in productivity, absenteeism, or other performance metrics that could indicate an impact from personalized compensation?

• Recruitment success: Track recruitment metrics like acceptance rates to see how they’ve developed once your new compensation strategy has been implemented.

• Utilization of benefits: Last but not least, be sure to keep track of how frequently your employees take advantage of specific benefits to see whether they make a difference to them.