Compensation and Benefits, The purpose of compensation and benefits
Compensation and Benefits (HRMT415-2202A-01)
Discuss the purpose of compensation and benefits from the organization's viewpoint.
Provide examples of strategic and tactical recommendations that an HR specialist might make to senior leaders with regard to direct and indirect compensation.
Discuss the purpose of compensation and benefits from the organization's viewpoint.
Just as a person is searching for the perfect job, an employer is searching for the perfect candidate. In order to find the perfect candidate, the recruiting team will use compensation and benefits to attract top talent. Compensation can be monetary or non-monetary and is a direct way for an employer to reward an employee for their work. Benefits are always non-monetary and is something an employer offers employees to motivate them. It is an indirect way to pay an employee for their work. There are several reasons that a company will offer competitive benefits and compensation to employees and potential candidates. One reason would be to attract the highest caliber talent around. If a company can offer a great package that will include an enticing salary as well as additional benefits, it can be picky about who they hire and hold out for the best candidate possible. Another reason is to retain and motivate the current employees. If an employee feels appreciated and adequately compensated for the work they do, they are more likely to have higher morale and be motivated to work hard. They are more likely to be loyal and will be less likely to want to look for other opportunities and leave (Wooll, 2021).
Provide examples of strategic and tactical recommendations that an HR specialist might make to senior leaders with regard to direct and indirect compensation.
For some employees a direct compensation such as a monetary salary is not enough to entice them to join or stick with a company. Indirect compensation can be excellent incentives to attract and keep talent. Some examples of indirect compensation are:
Medical benefits – Some people know in advance that they will need to use medical benefits more than others, so an attractive medical package could be key.
Technology – Many companies use technology as an indirect benefit. The use of a company phone, laptop, and car could be extremely beneficial, especially since having these could take away the need to pay for them. If an employee is given permission to use them for personal use, then this could mean hundreds and maybe thousands of dollars in savings per year.
Tuition reimbursement – Continuing education benefits both the employerand employee. The employer will have an employee that has more knowledge that could help with job execution. It benefits the employee because of the high cost of education, potential promotions because of the material learned at class, and a degree that can be used elsewhere.
Childcare – This is another way to benefit both employees and employer. No employee wants to miss out on work and money because of the high cost of childcare. No company wants an employee to miss out on work for that matter also. You expand your talent pool when you have parents that are able to work instead of staying at home with children. Parents are able to earn more while not breaking the bank on childcare.
The possibilities for indirect benefits do not just end with this list. Left out was retirement packages, vacation/paid time off, consumer discounts, free food, and more. The more benefits you add to a position, the more employees will want to stick to an employer (Verlinden, 2022).
References
Wooll, M. (2021, July 27). Compensation and benefits: Why the right pay and perks still matter. BetterUp. Retrieved March 2, 2022, from https://www.betterup.com/blog/compensation-and-benefits#:~:text=Compensation%20is%20a%20way%20for,Benefits%20are%20always%20non%2Dmonetary.
Verlinden, N. (2022, February 3). Indirect compensation: A full guide with 11 examples. AIHR. Retrieved March 2, 2022, from https://www.aihr.com/blog/indirect-compensation/
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