Tuesday, November 27, 2012

Personnel Comp Letters

2013 Personnel Comp Letters
Every year, every employee of your organization or church should receive a personnel compensation letter. This letter is a summary of all that the church pays in order to have this person as an employee. There are several reasons for creating this letter each year:
  • It provides documentation for the employee for his/her own knowledge. Otherwise, some employees would never learn if they got a pay raise or not.
  • It provides documentation for the employee's personnel file in the finance office in case the auditor or Department of Labor investigator wants to see it.
  • It helps the employee to see what the "total cost" of him/her working at the church is. Many employees grumble because they're not paid enough. This document will show that while their wages may be lower than they want, the employer provides a significant number of additional benefits. The letter explains how much those benefits would cost the employee if he/she had to buy them personally.
The letters that I send out have the following format:
  • Previous Year Gross Salary Figure
  • Next Year Salary Increase
  • Next Year Gross Salary Figure
  • List of benefits with a brief description of each and how much they cost for that specific employee
    • Employer FICA/Medicare (many employers forget this but it is a cost of having an employee)
    • Retirement
    • Health insurance
    • HSA contribution by the employer
    • Dental insurance
    • Other insurances: life, long-term disability, short-term disability, workers' comp
  • Total Estimated Compensation (BTW, you should insert the word "estimated" or "anticipated" lest any employee leaving in the middle of the year demand to be paid the "Total Compensation" this letter might imply).
This is a time-consuming process. Each letter should be tailored to every individual. For instance, ordained ministers' letters will not contain the FICA paragraph, but non-ordained staff will have it; some classifications of ministers will have different benefits than other classes. Tailoring the letters helps the employee know exactly what his/her benefits are. Take the time to do this or have it done. It will help employees see themselves in a new light, and it will help the personnel committee of the church see the true cost of their staff.

Lead On!

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