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o these phrases look familiar?
The total cost of your companyprovided benefits adds XX% or more to your salary. This "hidden paycheck" is a significant part of the total compensation you receive from the company.
This handbook describes your benefit programs, including health and other insurance, retirement, savings, and paid time off As you review this information, remember that these benefits are part of the total compensation you receive from your job.
As the cost of benefits continues to consume an increasing share of corporate America's profits, management increasingly sees a need to strengthen the link in employees' minds between indirect and direct compensation. Yet few companies have gone beyond communicating messages like the two examples here, often found in one form or another in annual benefit statements and employee handbooks. While companies attempt to introduce the theme of total compensation in communications materials such as these, what most companies actually maintain are packages of independently functioning benefit programs that bear little resemblance to compensation. Instead, these programs operate more as entitlements. Moreover, the design of these programs frequently conveys inconsistent messages about the way the employer manages and allocates compensation dollars.
As we work with major companies, we hear a new emphasis on true total compensation. Employers are interested in moving away from an array of independent entitlement programs toward an integrated, business-driven rewards system. One such company is Owens-Corning Fiberglas Corporation, a Toledo-based manufacturer of building products. Owens-Corning implemented a completely restructured total compensation program for its U.S. salaried workforce on January 1, 1996, and plans to extend the program to its nonsalaried and non-U.S. employees over the next five years as labor and other conditions permit. This new program, called "Rewards and Resources," includes aspects that are unique to Owens-Corning, but the programs design concepts have broad applicability.
The Owens-Corning story is a good introduction to the conceptual framework supporting the design of a total compensation program. This framework requires companies to adopt a new vocabulary that leaves behind the terminology of separate plans and programs--pension and welfare benefits, savings plans, salary, bonus--and expresses all forms of rewards as part of a unified whole. We have adopted "cash equivalents" as our term for the new conceptual framework.
Owens-Corning: A Performance-Based Compensation System