The number of employee benefits gets is directly related to their total pay. The more benefits an employee gets, the higher their total pay (TEC). It also matters how good these benefits are and how easy they are to get. What’s the point? In this blog, we’ll explain how employee benefits affect TEC and why you, as an employer, need to care about TEC so much.

Benefits can range from simple rewards for participation, like time off or the chance to work from home, to full dental, health, and vision insurance plans. As an employee, it’s enough to say that it’s very appealing for a company to offer such plans, with dental, vision, and health care at the top of the list.

This is because it protects not only the employee who pays for it, but also, in many cases, their dependents and spouses.


To answer the question, “How do employee benefits affect total compensation?” we must first define “total employment compensation.” Total employment compensation is the sum of all the money you, as an employer, have paid your employees for doing their jobs and helping you. This number will include the base salary (either an annual salary or an hourly rate), the dollar amount of any benefits you offer (health, dental, vision, paid time off, profit sharing, gym membership, retirement plans, etc.), commissions, and bonuses.
On the list of things that make up total pay, you might find:

  • Paid time off for things like jury duty, vacation, personal, holiday, and bereavement.
  • Healthcare, including flexible spending accounts and/or health savings accounts
  • Life insurance
  • Development opportunities
  • Career advancement opportunities
  • Retirement plans
  • Relocation expenses
  • Insurance for the disabled
  • Programs to help employees
  • Pay by the hour or by the year.

If you offer a better total compensation package, you can hire the best people in your industry and keep your best workers. It might also give you a better idea of how much each full-time employee costs you in total.


Since your TEC isn’t just made up of people’s direct play, the addition of benefits has a direct effect on it. Including health insurance, stock options, and social benefits all make your TEC better, which is great for you as an employer. Also, keep this in mind when you’re looking at a budget and you’re not sure how much money your company spends on each full-time employee. About 30% of the total value of an employee’s pay comes from the benefits they get.


Total compensation shows that your company has a good compensation management program, which is important if you want to attract and keep the best people in your industry. People look for jobs that pay well and have benefits that are important to them. You’ll find that health, vision, and dental care are among the best benefits. But different employees will value different perks more or less.

If your benefits aren’t as good as those of your competitors, people may be less likely to apply to your company and instead choose to work for one of your competitors. If you don’t offer enough benefits, your current employees may be less likely to stay with you.

When planning your hiring process, it can be very helpful to list the benefits of working for you. During the interview and hiring process, when applicants hear about the pay and benefits, they are more likely to want to do what they do. People want benefits like helping with student loans, being able to choose where they work, and moving up in their careers. By showing that you are willing to talk about these benefits, you get the candidates’ attention.

How do you get the word out about your total pay?

TEC can be sold, and your company can use it to grow and keep current employees interested. It shows, in simple terms, why people should work for your company. You could send a total compensation statement to your current employees to show them any new benefits. This can go into detail about the benefits being offered and who can get them. The same statement can be shown to people who might be interested in the job. The end goal is to show how well the benefits and/or perks your company offers can be turned into money.


Total employment compensation is hard to figure out because some benefits, like being able to work from home and having flexible hours, are hard to quantify in dollars. Otherwise, all you have to do is add up the value of all the benefits you give your employees, including their pay. Divide this number by the number of hours this employee works each year. Your TEC hourly rate is what you get at the end. If a candidate is looking at more than one job at the same time, they can use this number to compare themselves to other candidates.

Still not sure how employee benefits affect total compensation or want to know more about the benefits of a good total employment compensation number? Talk to the people at Hitchings Insurance Agency about how to improve your TEC with benefits.

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