If you’re the owner of a small business, the following may not come as a surprise: Government figures released earlier this year* show that wages and salaries paid to employees of small firms (between 1 and 99 workers) accounted for 73.8% of total employee compensation. The remaining 26.2% is the cost of the employee benefits that employers provided.

This means that your employees could “earn” a lot more than their pay stubs show. If they aren’t aware of this fact, you may want to share it with them — especially since certain benefit costs, such as health insurance, keep increasing.

Provide a Reality Check

There are several good reasons why your employees should be aware of their “hidden” compensation. The most important may be to make them aware of your costs. You might want to prepare a company-wide benefit statement showing how much you spend on paid leave, health insurance, and contributions to a retirement and/or profit sharing plan, as well as other insurance premiums and benefits (including the legally required ones: Social Security, Medicare, workers’ compensation, and unemployment insurance). This can be a real eye opener.

Get Feedback

A public review of your employee benefits is also an opportunity to make sure your workers know what’s available to them. It could lead to questions and provide you with feedback about what your staff feels is important. You might find out that something you view as a valuable benefit is not something your employees need or use — or even want.

Encourage Understanding

If you’re planning to make changes that call for your employees to absorb a greater portion of their benefit costs, workers may be more sympathetic when they understand the economics of your decision. If you have to deliver a negative message, be honest and straightforward. Being prepared with cost comparisons for a number of years will help your employees see the big picture. And be sure to highlight the costs that you still plan to cover.

If you’d like our help preparing figures that show how much you provide in the way of benefits, just give us a call.