Money For Nothing

CEO tells employees exactly what he pays in insurance costs to help them understand the expense of keeping them on.

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APRIL 1990

Small, growing companies usually can't pay their people as much as the large outfit down the street. And while employers know that insurance and the cost of other benefits are eating them alive, their employees rarely understand the true expense of keeping them on the payroll.

Doug Greene, CEO of New Hope Communications Inc. -- a Boulder, Colo., company that publishes magazines for the natural-foods industry and economic development -- makes sure his employees know exactly what it costs the company to keep them on board.

"We don't just tell a new employee she'll be making $25,000 a year," says Greene. "We say her total benefit package is $36,750, and then we explain that in addition to the $25,000, we are also paying $495 a month for her insurance, $25 for parking, and so on down the line."

Greene is convinced his disclosure makes it easier to control his costs. In giving her a raise, Greene might tell the employee her total compensation package is being hiked 11%, including a 4% raise in compensation and a 7% increase in benefits. That helps impress upon the employee some of the increases in insurance premiums New Hope has had to pay.

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