Labor costs can be the biggest expenditure for organizations. It’s easy to know how much your spending on pay, healthcare, retirement, and other benefits. Most finance teams look at those numbers monthly. But how do you know it’s money well spent? Are your employees even utilizing the benefits? Is there any money being lost?


Establishing metrics in Total Rewards can help.

An effective and competitive total rewards program will help your organization attract, retain, and motivate the best talent. The program’s strategy should also match the organization’s culture and goals. Metrics can identify the return on investment (ROI) so you can gain the buy-in from key business leaders. The right metrics will even help you find opportunities for cost-savings which will give HR even more kudos from the c-suite.

Let’s look at the two biggest components to total rewards, compensation, and healthcare, and identify a few metrics.



Understanding the total spend related to employee wages is important, but doesn’t say much if you don’t know how competitive the salaries are. Your spend could look high on your budget but are actually low in the market.

Comp ratio is a good metric for determining if your compensation is competitive. To calculate, divide an individual’s pay rate by the midpoint of a benchmark salary range. If the resulting number is 1, then the person’s salary is right at the midpoint. If the number is above or below 1, then their salary is above or below the midpoint, respectively.

If compa ratios are consistently low across the organization, there’s a good chance you’re losing quality talent. Keeping wages at the lower end of the ranges can be an effective business tool. HR and leaders just need to understand the risks, including higher turnover rates. The risks can also be mitigated by creating an engaging org culture or offering creative benefits like unlimited PTO.

Alternatively, if compa ratios are consistently high, then you might be overspending. You may not need to be paying the higher salaries to retain talent. This could also mean you have employees who are working just for the high pay, not because they’re engaged. Compa ratio is an integral part of an effective compensation strategy.



The most important metric here is Usage by Plan. It helps you determine how many people are enrolled in each health plan you are offering. You might be surprised about what plans people are choosing. The premium cost is a big decision driver for which plan employees will choose. But, other highlights like services covered or out-of-pocket expenses like co-pays and deductibles factor in too.

Now, just because a plan has a high enrollment rate, doesn’t mean they’re using the plan. For instance, let’s say you have a PPO plan that minimizes the premium cost for employees and also has low out-of-pocket expenses. There’s a good chance employees just enrolled into the plan because of the low premium costs, not because they need the services it covers. You could be paying for a high-cost plan and wasting the money. After finding the Usage by Plan number, it would be beneficial to work with your benefits administrator or health insurance vendor to analyze more in-depth usage numbers. Benefits has a lot of opportunity for data and metrics.

Cost-sharing isn’t the only way to reduce the company’s expense on healthcare. Offering plans, like high-deductibles, that more accurately meet the needs of the employees can be a solution. Also, promoting alternative medical providers like urgent care or telemedicine can drive down costs.

Metrics are an integral part of any effective total rewards strategy. They can help you understand how competitive the strategy is while identifying opportunities for cost-savings.

An HR dashboard can help you create and manage your data and metrics effectively. It creates quick and easy visualizations so you can skip straight to the analytics. Sign up today for a free demo of our automated HR dashboard.