Why You Shouldn’t Reveal Employee Benefit Costs

“Imagine if one day you walked into your workplace and found your name, along with all the other names of your co-workers, written on bright Post-It notes and your salary rates clearly written there too? Now, include all the salaries and perks that your supervisors, the CEO, and even the janitor displayed for all to see. How would this experience change the way you view your company?” – Tess C. Taylor (@HRKnows1), Founder of The HR Writer

Many organizations feel it’s necessary to share the true cost of the benefits they offer to their employees. Recently, I wrote an article discussing the same; what about the opposite side of the coin? The movement towards transparency is a good thing and being clear and open about the benefits you offer is part of a transparent culture. But is sharing how much employee benefits cost with your team taboo like sharing paycheck information? There are factors to consider when revealing the cost of employee benefits, factors that can carry a hefty toll on your team.

Risk of Disengagement

As Taylor alluded, the varying extents of perks throughout the company ladder can lead to a frustrated team and disengaged employees. Although employees are legally allowed to share their salaries with each other (as they are permitted to talk about how work affects them with other employees), corporate dispersal of income and benefits can create a competitive atmosphere. In fact, although 95% of health care plans offer transparency tools, however only 2% of members use them. So, while transparency is great for your culture, most companies are aware full transparency in benefits isn’t always the best decision.

Competitive Employees

The competitive nature of blindly sharing employee benefit costs can deteriorate the company culture. For example, say some of the members of your team have young children and take advantage of the corporate childcare… how will you equally compensate those who don’t have children? If employees know the cost (or at least discount) of certain benefits, fringe or not, it could drive some to want equal compensation. Although it’s not federally illegal to give different employees different benefits, be careful when delineating the benefit packages you offer your team. The Society for Human Resource Management (SHRM), explained:

“…It is not necessary under federal laws to give equal benefits to all employees, but an employer should base benefit eligibility on tenure, full- or part-time status, exempt or nonexempt status, job group or even department. An employer must exercise due diligence to ensure its benefits are not discriminatory.” 

Look at it From Another Perspective…

Let’s view this from a consumer standpoint – since many benefits are already headed down that path. When a company decides to share the production cost of items on their sales floor, there are similar risks involved when sharing benefit costs. While customers appreciate the cost of the materials, other price tags such as transportation or processing aren’t as well received. Likewise, employees might appreciate the basic costs of the benefits, but when it comes down to the internal processing fees and the like.

Transparency in the workplace is often touted as a must have for satisfied and engaged employees. When it comes to complete transparency about benefits, the lines blur significantly. It’s your choice to withhold that information or to share it with your team, but be aware there are some significant repercussions to take into consideration. It has to fit the culture of your team and the culture of the organization for this movement to be successful. Perks and benefits can be a sensitive subject for your employees, like salaries; are you ready to share that information with the company?

Bio: Tim Olson

Tim Olson, CEBS, CMFC and Managing Partner of the Olson Group, has been working with Nebraska employers for over 33 years and has been in the employee benefits industry since 1980. Presently, Tim works with employers assisting them with self-funded and fully insured medical and dental programs, consumer-driven health strategies, term life, long term disability insurance, section 125 flexible benefit programs, voluntary benefits, retirement programs, and executive compensation plans.  Tim currently works with more than 200 employers participating in 500 employee benefit plans, and covering more than 30,000 employees throughout Nebraska, Iowa, Missouri, and Kansas. You can read more about Tim and his insight on employee benefits needs on The Olson Group Blog.

Views: 220

Comment by Andy Shera on November 29, 2015 at 9:42pm

Hello..

i can understand why when salary differentiation goes on public can impact employee productivity, i've been there before when i somehow know from my friends that my colleague have better salary than mine, twice as much, and we working together with the same load of job! now i know that i have to call headhunter indonesia to help me out to move to other company

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