Compensation and benefits is a sub-division of human resources management, dealing with employee remuneration and benefits through policy-making initiatives. Incentives that stimulate better work may be provided periodically, depending on an organization’s culture and objectives.
Monetary and Non-Monetary Types of Employee Compensation
Formal Pay Structure
Monetary incentives may come through salary increases or be given separately
Non-monetary compensation implies involve benefits given to workers in regard to the services they render to the company (Noe, Hollenbeck, Gerhart, &. Wright, 2011). They encompass Leave Policy, Car policy, Health Policy, Indemnity, Overtime Policy, Leave travel Assistance Limits, Pension Schemes, and Holiday Homes.
Legally Mandated and Voluntary Benefits
Variable pay is an example of voluntary benefits paid by an organization to a worker that is based on management discretion, effectiveness or results realized. Usually, voluntary benefits are best represented in bonus forms and sales incentives.
Benefit communication should involve offering employees the right information on the incentives they stand to gain and allowing them adequate time to make hard decisions if any. The practise also involves helping them go about permanent conditions, which is usually easier to manage than awaiting the eleventh hour. Employees should be educated on behaviors like maintaining good health and refraining from drug use (Tacchino, &. Littell, 2011).
Compensation policies are often riddled with different problems. These include the challenge of hiring the right employee to a given position. Unfavorable Political, Economic, Social, Technological, Legal and Environmental conditions hinder the implementation of better compensation policies (Szendrei, &. Rodriguez, 2010).
Pros. Formal pay structure is advantageous because an employee can make permanent plans based on it. Non-monetary compensation enables the employee to save monetary resources and feels part of the organization.
Cons. Monetary compensation can be easily wasted by the employee. Non-monetary compensation may sound a long-drawn burden to an employee, especially those who have access to better non-monetary compensation offered by an organization.
Potential Costs of Employee Benefits
Benefits costs impact an organization’s assets, depending on the amount and the period within it should be settled.
Environmental Factors that can Influence the Compensation and Benefits of an Organization
Environmental Factors Identification
A clearly undertaken PEST analysis looks into environmental factors that impact the implementation of employee compensation benefits. These include stringent policies, and the uncertain economic situation facing the organization. Fewer organizational strengths and opportunities, and heightened weaknesses and threats could limit employee compensation: conversely, the reverse picture would impact better remuneration policies.
Environmental Factors Analysis
Stiff competition from market rivals, unfavorable labor laws, and the high rate of joblessness could impact the compensation of employees.
Benchmarking Activities Related to Developing Competitive Compensation Structures
Benchmarking and Desired Outcomes
Benchmarking strategies such as pegging employee compensation and benefits on the organizational gains is probably the best, as it ensures the company stays safe in case the gains dwindle.
Current Issues Faced by Organizations Related to Employee Compensation and Benefits Packages
Current Issues and Impact
Rapid expansion plans, or upgrade the systems often requires a lot of resources and could eat into the employee compensation and benefits. The developments could lead to the reduction or stagnation of the employee perks
Employee compensation and benefits policies should be implemented to enhance organization’s competitiveness. Owing to the impacts of environmental factors on such programs, they should, nonetheless, be pegged on organizational goals and gains.