Does your total compensation program reflect what employees value?

Health and dental coverage, disability insurance, retirement contributions, mental health support and other programs can add real value to an employee’s compensation. Yet many employees still judge their compensation by one number: the amount deposited into their bank account.

That creates a costly blind spot.

As a business owner or leader, you may feel you offer a competitive package, while employees might feel their needs aren't being met. The problem isn't necessarily how much you're spending; it may be what you're offering, how the programs work together, or whether your team understands the value they're getting.

Total compensation is more than salary

Employees experience compensation in different ways.

Salary supports their needs today. Health and insurance benefits help protect them when something goes wrong. A workplace retirement plan helps them save for the future.

These parts are often managed separately inside a business. Think about it – salary decisions may sit with leadership; benefits may only be reviewed at renewal time; your group retirement plan might only get attention when fees, investments, or providers are discussed.

Oftentimes, employees don't see these as separate programs; for them, it's all part of their compensation package. Together, these elements shape how supported and valued an employee feels.

This is why it's helpful to look at salary, benefits and retirement through one total compensation lens.

Different employees value different things

There is no single benefits package that every employee will value equally.

A young employee may care about mental health support, prescription drug coverage, or help building their first emergency fund. A parent may place greater value on dependent coverage and flexible access to care. Someone later in their career may pay closer attention to retirement contributions, disability coverage and financial planning support.

Your team may also include employees with different family structures, health needs, incomes and levels of financial knowledge.

The bottom line? Your overall benefits program can be competitive on paper, but may still feel disconnected from much of your team.

This doesn't mean you need to offer every possible benefit, but rather, that you need to understand who your benefits program is truly meant to serve.

Mercer’s 2024–2025 Canadian benefits survey found that 82% of participating organizations planned to prioritize a better understanding of employee needs, preferences and perceptions over the next one to three years. That is a useful shift. The question is no longer just, “What benefits do other employers offer?” It's also, “What does our workforce need from us?”

Understanding shapes perceived value

If your team doesn't understand their benefits, they'll have a hard time valuing and appreciating them.

Consider a workplace retirement plan with an employer-matching contribution. An employee may know the plan exists, but might not understand how much the employer contributes, how those contributions can grow, or what they need to do to receive the full match.

The same applies to disability insurance, employee assistance programs, and virtual health services. Employees may not appreciate these programs until they need them. In some cases, they may not know how to access them at all.

This creates a gap between your investment and your employee’s experience.

A booklet provided during onboarding is not an ongoing communication strategy. Employees need clear, timely reminders that explain:

• What’s available
• Why it matters
• How the employer contributes
• How to access the program
• What action the employee should take
   

Communication should also connect programs to real moments in an employee’s life. Retirement education will be more meaningful when it addresses questions employees are asking, such as how much to contribute, how to select investments, or how a job change could affect their savings.

Salary is only one part of the picture

Salary will always matter. It's immediate, easy to compare, and affects your team's daily lives.

Benefits and retirement contributions can be less visible. As you add or improve programs, your team may not realize or recognize the changes.

This is where a total compensation statement can make a difference. It can show your employee's salary alongside your cost or contribution toward benefits, retirement savings and other programs, making a less visible investment easier to understand.

The way this information is presented matters. A long list of dollar values may not be enough. Employees also need plain-language explanations of how each part supports their physical, mental or financial well-being.

Participation doesn't tell the whole story

A high claims level doesn't always mean a benefits plan is working well. And on the flip side, low usage does not always mean a benefit is unnecessary.

Employees may avoid using a service because they don't understand it, find it difficult to access, or worry about privacy. Others may be using one part of the program because a more suitable form of support is missing.

Retirement plan participation can create similar questions. Enrolment alone does not tell an employer whether employees are saving enough, using the full employer match, or making informed investment choices.

That's why it's important to look beyond whether a program exists. Review how employees use your programs, and whether your current programs truly support your team.

Useful measures may include:

• Participation and contribution rates
• Use of the full employer retirement match
• Benefit utilization patterns
• Employee questions and feedback
• Awareness of available services
• Whether employees understand the value of the full program
   

These findings can reveal where education, plan design, or access needs to improve.

Bringing salary, benefits and retirement together

Mercer's survey also found that 98% of the organizations viewed talent attraction and retention as a key reason for investing in employee benefits. At the same time, 88% planned to develop cost-containment strategies.

In other words, employers are looking to provide meaningful support while managing what they spend.

The good news? These goals do not have to work against each other. A better approach starts by asking a few practical questions:

1. What are we trying to achieve?

Is the priority attracting employees, supporting retention, improving financial well-being, or addressing a specific workforce risk?

2. What does our workforce need?

Use employee feedback, demographic information, and program data rather than assumptions alone.

3. Are salary, benefits and retirement working together?

Look for gaps, duplication, and areas where spending may not support your business goals.

4. Do employees understand what they have?

Review communication at onboarding, throughout the year, and during important life and career stages.

5. How will we measure value?

Track more than cost. Consider participation, understanding, employee feedback and whether programs are producing the intended outcomes.

The goal is alignment

The strongest total compensation program isn't necessarily the one with the most features. Instead, it's the one that reflects the workforce, supports the goals of the business and makes thoughtful use of every dollar being invested. It is also a program employees can understand and use.

We help businesses examine benefits and retirement programs as connected investments in the physical, mental and financial well-being of their employees. By reviewing plan design, cost, employee needs and communication together, employers can identify blind spots and make more informed decisions.

If you're not sure whether your employees see the full value of what you offer, let's talk. A broader review of your total compensation package is a great place to start.

Sources

1. Innovative and emerging benefits survey 2024–2025. Mercer. https://www.mercer.com/en-ca/insights/people-strategy/innovative-and-emerging-benefits-survey-2024-2025-highlights/.