Compensation & Benefits

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 What is Compensation & Benefits

Compensation & Benefits refers to what worker get in return of labour that is salary, monetary as well as non-monetary privileges provided by the employer in an organization. (Azmi, 2021).

C&B is a vital tool to attract best fit to the organization, motivate and retain the employees. It works in a way Better is the C&B better is the performance & retention.


Objectives of the C&B  (Azmi, 2021).

·       To control the incurring cost of Organization.

·       Ensure legal provisions are adhered.

·       To sustain and enhance employee motivation.

·       To benchmark the Company.

·       Attract right candidates.

·       Retention of employees.

·       Justify the work done by employee by good pay.

 

Components of C&B (Wooll, 2021)

·       Fixed Pay

Fixed pay is a sum of money an employer pay employee for their work done in a particular month excluding bonus, overtime, or incentives. Legal factors such as minimum wage, statutory pay, industry standard could determine the fixed pay.

·       Variable Pay

Variable is differed based on Company as well as Employee’s performance. Usually, it is paid once in a year.

·       Equity Pay

Some companies include stock options as a reward based on employee performance, they allocate shares to the employees, or they sell the market share with discounted rate. However, these stocks vest only after an employee spend certain period in the Company.

 

Culture Based C&B Strategy

Employees are expected to reward how employees are uphold the Organization values and beliefs in other words Company Culture.


Figure 1. Culture Based Compensation Strategy


       

Steps to create a culture-based Compensation Strategy

1.       Understand your Organization Culture

It is imperative to understand the Organization culture to align the C&B strategy.

The graphic below shows four Organizational culture types.

 

Figure 2. Competing Values Framework

 

2.       Identify the behavior to promote your desired culture

If compensation strategy in linked to culture different reward will be considered to different culture types. Thus, to determine the culture Company need to fix and encourage compensation strategies to sustain the culture.

 

3.       Determine your direct and indirect compensation elements

Once the clear link is established between Culture and Compensation, it is time to decide what goes into your total reward package.

(Lancu, 2022)

 

References

Azmi, W., 2021. startuphrtoolkit. [Online]
Available at: https://www.startuphrtoolkit.com/compensation-and-benefits-in-hrm/
[Accessed 04 05 2022].

Lancu, S., 2022. Academy to Innovate HR. [Online]
Available at: https://www.aihr.com/blog/compensation-strategy/
[Accessed 04 05 2022].

Wooll, M., 2021. Betterup. [Online]
Available at: https://www.betterup.com/blog/compensation-and-benefits#:~:text=Compensation%20is%20a%20direct%20payment,or%20partially%20exempted%20from%20taxation.
[Accessed 04 05 2022].

 

 

Comments

  1. Dilini MBA4 May 2022 at 19:17

    As discussed, managing employee rewards and benefits is a very important role of HR managers. When employees are properly rewarded, recognised and appreciated, it will increase their morale and engagement levels. This will in turn increase productivity. When employees are happy they are more committed which will reduce absenteeism and turnover levels. Good article.

    ReplyDelete
  2. FuardMBA245 May 2022 at 10:53

    Compensation and benefits are the most important tools for a company to achieve their corporate mission. employee retention is very important to achieve said goals. we can motivate and retain employees by giving their incentives. in this article you have explained objectives and its component in deeply. good one all the best

    ReplyDelete
  3. Anuradha Wickramasiri6 May 2022 at 07:33

    Managing employee rewards and benefits is an essential requirement to increase employee productivity.It will increase employers outcome which has a direct impact to organizational performance.
    You have clearly described the topic .Good job.

    ReplyDelete
  4. Gayan Marasinghe6 May 2022 at 07:49

    Employee loyalty and motivation to work and perform increases as compensation and benefits are increased. Companies that pay lower compensation have greater staff turnover and lower productivity. Therefore it affects organizational performance. All the best!!

    ReplyDelete
  5. Kawshi M. Perera ♥️6 May 2022 at 08:48

    Compensation and benefits are an important tool for attracting the finest personnel, motivating them, and keeping them. It kind of works. Higher C&B, better performance, and better retention.Good article !!

    ReplyDelete
  6. Niluke Sirimanna6 May 2022 at 10:31

    Employee morale and engagement will increase when they are properly rewarded and recognized. Employee retention is critical because happy employees are more dedicated, which reduces turnover. good article

    ReplyDelete
  7. Amjad Aboobakar6 May 2022 at 22:02

    C&B is vital as mentioned, it is also equally important to to achieve employee satisfaction which leads to efficiency and productivity.

    ReplyDelete
  8. Pasan Nanayakkara6 May 2022 at 22:42

    Providing proper compensation and benefits to employees is essential in retaining and recruiting talented and employees to an organization and HRM is key in managing the company HR policies. As mentioned in this article, compensation and benefits is crucial in developing a desired organizational culture. For example, providing incentives is a popular C&B tool used in market cultures to increase productivity of its employees. Great article. Well done.

    ReplyDelete

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