It’s called ‘total rewards.’ So why doesn’t anyone know the total?
Here is a question that should be easy for any big company to answer: How much are we actually spending on this employee?
Not just salary. But what does the company contribute to the employee’s 401K? How generous are its health benefits? What does it provide for maternity–or parental–leave? What even counts as paid leave? Add in insurance, disability, and the rest of the benefits package: What is the company actually spending on this employee?
The surprising answer is that many companies can’t actually tell you. And yet, enterprise organizations are making consequential decisions on what to offer someone, where to hire, who deserves a raise and what positions they can afford without seeing the full price of the person.
We call it “total rewards.” But we don’t manage it as a total.
The missing price tag
Benefits account for roughly 30% of employer compensation costs, according to a Bureau of Labor Statistics report from earlier this year.
Think about what that means. An employee with a $100,000 salary may actually cost the company tens of thousands of dollars more. But salary and benefits are generally managed in different systems, by different teams, with different data.
For a multinational company, the problem gets worse. Benefits information may be scattered across insurers, brokers, and local contracts in dozens of countries. So a hiring manager may know exactly what salary they’re offering someone in London or Seattle but have little idea what the company’s total investment in that person will be.
Imagine making any other major investment while ignoring 30% of its cost.
Meanwhile, we’re losing money on the other 70%
The salary side isn’t necessarily managed much better.
Every day, managers and recruiters make thousands of decisions about offers, raises, and promotions. Even though most companies have their own standard compensation philosophies and salary ranges, those policies don’t always govern what actually happens when a manager is trying to land a candidate.
And mistakes compound. If you overpay someone at hire, the cost doesn’t disappear next year. The next raise gets calculated on top of it. So does the next promotion.
Our research at Syndio found that companies without continuous governance of these decisions can spend as much as 1% of total payroll annually remediating problems after they happen.
We’re essentially flying blind on both sides of the same enormous investment.
Maybe “total” should actually mean total
This isn’t just an HR problem. If I’m a CFO trying to understand the return on our people investment, I shouldn’t have to assemble two different pictures of what we’re spending. If I’m deciding where to hire, I should know the full cost of employing someone in one market versus another.
The technology to do this is catching up. Decision Intelligence for Pay platforms, like Syndio, give companies a way to govern compensation decisions before they’re made. The same shift is happening for benefits. Platforms like Origin are built for enterprise benefits intelligence that turns scattered global benefits information into a single view across every market.
But the bigger change is one of mindset. Employees aren’t a salary plus a collection of benefits. They’re one investment.
We’ve been calling it “total rewards” for years. It’s time we started managing the total.
