On the iconic TV show from the 1990s, Friends, Rachel, newly minted as a waitress at a coffee shop, excitedly receives her first paycheck, only to exclaim: “Wait a minute. Who’s FICA and why did he take all my money?”
Naturally, employees see clearly on their paycheck stub (or online equivalent) a record of their direct compensation, including deductions for tax withholding and the employee’s cost for health insurance. But they don’t see the many other benefits the company pays for them, what we call indirect compensation. This includes the company’s share of health insurance, taxes and retirement contributions, as well as paid time off (vacation time, sick time, holidays) and extras like tuition reimbursement and car allowance.
Precision Payroll offers a Total Compensation and Benefits Report, which provides you with an individualized report to provide to each of your employees, showing their total compensation package for the year (including direct and indirect compensation). This is important because it helps employees understand all that they are receiving in terms of the company’s contribution to them—pay and benefits.
It also gives the company a clear picture of the overall compensation, which can aid in the recruiting process, to help the company show the full value of what they offer. This is especially true if the salary you are offering for a particular job may be lower than other companies may pay, but the indirect benefits you offer boost the total compensation to the same level or higher.
This report is easily generated using existing payroll information, and plugging in some additional data. Gary Young, Director of Client Services for Precision Payroll, says that this is a good time of year for many companies to engage this service. “Employees have recently received their W2 and see what they earn and what the deductions were, but with this report, the company can show them the full picture of what they receive and the value,” says Young.
It also helps the employer see clearly the total cost of benefits, data that can be used to make decisions and changes. “Many clients call it the hidden payroll,” Young says. “In addition to the individual reports for each employee, we provide a spreadsheet for the employer, showing the total cost of compensation and benefits.”
To see a sample of this report on our website, click on the following link, http://www.precisionpayroll.com/payroll-services/administrative-services/. Questions may be directed to Gary Young, Director of Client Services, at 630-242-1522. Your payroll specialist can also help you get started with this service.