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Design and Implementation of an Effective Compensation and Benefit System

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Large organizations have a specialized Human Resource Department which is working on ensuring that a proper and effective environment is maintained and they ensure that the motivation level of employees is maintained. Compensation and benefit system do not only include the rewards and benefits given by the organization in monetary terms but non-monetary rewards like health insurance, vacation, sick leave etc are also included in it. Increasing the compensation and benefits could increase the motivation of employees but from the perspective of organization it could increase the cost and thus reduce the profitability, therefore, human resource department should come up with a system that ensures a healthy and constructive environment is built and maintained and at the same time profitability of the organization is not hurt. Compensation and benefits offered by the organizations should be evaluated and employees that give more efforts should be rewarded accordingly.
&nbsp.There are more than 3,500 employees employed at Holland Enterprises. However, it has been found that the company has lost almost 25% of the employees because of paying lower compensation and benefits offered to the employees.

Compensation and benefit system of the organization is an important aspect as better compensation helps in improving the productivity of the employees and as the productivity of the organization improves, it will help the company in generating more sales or increasing its revenues. There are two important aspects that the organization has to look while giving higher compensation and benefits to employees. the first one is that higher compensation helps in improving the sales of the company however the second aspect of increasing the compensation is that it increases the cost of the company and therefore it might not lead to improving the profitability (Spector, 2006).