Advantages of Compensation and Benefits

Compensation Management

“Definition: Compensation is the reward an employee receives in return for their valuable efforts while performing various jobs in the organization. Compensation management deals with every type of reward and its allocation in the most desirable way. These compensations are managed effectively to achieve equity, transparency and consistency across the organization” (Anjali, 2021).

Importance of Compensation Management (Anjali, 2021)

• It integrates workers efforts towards structure goals.

• Helps in exploit, maintaining, and making an impelled hands.

• Compensation is a necessary tool for managers in human resource management.

• Helpful in attracting gifted hands and making structure complete price.

• It allows increased work potency and job satisfaction among workers.

• Compensation management helps within the creation of talent pools.

Employers will create use of various elements for compensating their staff. These elements or varieties of compensation are mentioned below:(Anjali, 2021)

The different types of compensation include (Stewart, 2020)

·       Salary

·       Hourly Wages

·       Sales Commission

·       Tips

·       Stock Options

·       Bonuses

·       Incentive Pay

·       Other Variable Pay

·       Benefits (healthcare, paid leave, etc.)

·       Non-monetary compensation (recognition, meals, etc.)

How is Compensation Determined?(Stewart, 2020).

Determining a position’s compensation is not an easy task; there are several factors that require to be considered in order to present an enticing and fair rate to potential job candidates. Common factors companies use to work out compensation include: 

Required experience and education level of position

·       Job title and responsibilities

·       Industry average pay of similar jobs

·       Job location and cost of living

·       Availability of qualified candidates

·       Company size and reputation

·      Example of Compensation Management (Anjali, 2021).

Real world Example-Microsoft-compensation-management

Microsoft Corporation may be a technology-based multinational company. They supply a set of monetary and non-monetary benefits to their staff.

At Microsoft, they aim at a healthy life and investment in personnel’s future. They organize a specific set of programs, events, services and better human connections. Variety of them are area unit listed below:

•            Flexibility to worry for employees and their families.

•            Paid leaves to the family caregiver and new oldsters.

•            Promotes family support programs and organizes parenting categories.

•            Work schedules flexibility to the staff.

•            Microsoft focuses on the growth and career progress of the staff.

•            The company also provides an automotive lease policy.

•            They offer competitive pay to their staff.

•            Stock awards to staff supported their performance.

•            Bonuses other than salary for various functions.

ADVANTAGES OF COMPENSATION AND BENEFITS (Qader, 2015)

A well designed compensation and advantages plan helps to attract, motivate and retain talent in your firm.

1. Job satisfaction: Your workers would be happy with their jobs and would love to work for you if they get fair rewards in exchange of their services.

 

2. Motivation: We all have completely different kinds of needs. Some of us want money so they work for the company which gives them higher salary. Some value accomplishment more than money, they would associate themselves with firms which offer greater chances of promotion, learning and development. A compensation plan that hits workers’ needs is more likely to motivate them to act in the desired manner. 

3. Low Absenteeism: Why would anyone need to skip the day and watch not-so-favorite TV program at home, if they enjoy the office environment and are happy with their salaries and get what they have and want? 

4. Low Turnover: Would your employees need to work for any other boutique if you offer them fair rewards. Rewards that they thought they deserved?

 

References

Anjali, J. (2021) Compensation Management [Online] Available at: https://theinvestorsbook.com/compensation-management.html [Accessed on 10th April, 2022]

Qader, A. (2015) Compensation and Benefits: Definition and Importance [Online] Available at: https://www.linkedin.com/pulse/compensation-benefits-definition-importance-ahmed-abdul-qader [Accessed on 10th April, 2022]

Stewart, A. (2020) Compensation: What Does it Mean? What are the Types? Online] Available at: https://www.payscale.com/compensation-trends/what-are-the-different-types-of-compensation/ [Accessed on 10th April, 2022]