Employee Compensation and Benefits :
This refers to the salary or other benefits, be it monetary or non-monetary and is provided to the employees by the firm in which they work. Employee compensation and benefits are crucial to keeping the workforce motivated. It is an important aspect of Human Resource Management.
Some Basic Components of Employee Compensation and benefits
Employee Compensation and benefits are tangible, but there are intangible rewards, too. Employee compensation and benefits are divided into four main categories:
- Guaranteed fixed pay: The fixed amount of cash reward is paid to an employee by the employer. It is called the base salary. Cash allowances are also included in the guaranteed pay. This includes transport allowance and housing allowance.
- The varied pay: This is a non-fixed cash reward. However, it is given to an employee by an employer based on the performance of the employee and the results achieved by them. This could be extra incentives or bonuses for better performance at their jobs.
- Benefits: Employees will be provided with some benefits such as paid holidays, health care and medical insurance, dental, company vehicles, and much more. This keeps the employee motivated.
- Equity-based compensation: This is a compensation plan using the employer’s shares as employee compensation. It used to provide an actual or perceived ownership in the company. The typically common example of such compensation are stock options.
What are the tangible benefits?
The benefits measured in monetary compensation are called tangible benefits. These improve productivity and ensures the security of guaranteed fixed payments to the company’s employees.
What are intangible benefits?
The benefits that have great business importance and significant impacts but no monetary benefits, are called intangible benefits. Intangible benefits such as flexible work hours, letter of recommendation, experience in the corporate world, training and mentoring, opportunities to travel, and meet other people from the same sector are all intangible benefits that may prove crucial to some employees.
Moreover, compensation and benefits are an extremely crucial and significant part of the HRM of a company. It keeps the employees motivated, and provides great learning opportunities for the employees. Companies with great pay packages always attract the best and most hard-working employees. It also provides a way for employees to better themselves and improve their compensation and benefits.
How can a company improve its compensation?
The better the employees compensation and benefit programs of a company, the better their productivity. Moreover, a company must keep its employees satisfied as this will help a company grow on a larger scale. There are many ways in which an employer can work better to improve their benefits and increase their compensation, such as:
- Paying their employees a fixed amount of salary and incentives.
- Keeping the incentive plan simple
- Modifying salaries based on the employee’s geographic location
- Understanding and determining what your competitors are providing in their plans.
- Providing employees with useful non-financial rewards.
Moreover, if a company’s employees compensation and benefits program is fair, it will be a very useful tool to help recruit great new talent, increasing the employee workflow and morale, and encourage better and high performance.
