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Employee Compensation and Benefits

Categories: Compensation

Companies today should mirror their compensation and benefit programs with their long- term business strategy and organizational culture. According to Casio (2010), “Pay systems are designed to attract, retain, and motivate employees” (p.421). The most important objective is fairness or to achieve internal, external, and individual equity; and maintain a balance in relationships between direct and indirect forms of compensation, and between the pay rates of supervisory and nonsupervisory employees. Employers must perform job analysis, develop job descriptions, evaluate the value of job/position in the organization, develop pay structure and pay levels to create competitive employee compensation and benefits (Cascio, 2010).

Components of Employee Compensation and Benefits

Employers must gain their workers’ trust, loyalty, and motivation to ensure organizational goals are achieved. There are three major components of the benefits package: security and health (e.g. health insurance, disability insurance, hospitalization, surgical, maternity coverage, pension plans, etc.), payments for time not worked (e.g. vacations, holidays, personal excused absences, grievances and negotiations, sabbatical leaves, etc.

), and employee services (e.g. tuition aid, credit unions, auto insurance, fitness and wellness programs, moving and transfer allowances, stock-purchase plans, referral awards, flex work schedules, etc.). Factors such as the following are important strategic considerations in the design of benefits programs: the long-term plans of a business, its stage of development, its projected rate of growth or downsizing, characteristics of its workforce, legal requirements, the competitiveness of its benefits package, and its total compensation strategy (Casio, 2010).

Organizational Data to Conduct Human Capital Management Functions Organizations consider human capital management as a function of the human resources department in managing organizations’ most important asset, their employees.

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By creating a competitive compensation and benefits package, management puts emphasis on the economic value of their personnel. Because of today’s competitive environment, developing incentives that constantly improve employee performance, job satisfaction, and encourage motivation of every individual employed is essential to effectively achieve the organizations vision, mission, and goals. When the organizations human capital management functions and policies inspire employees to excel, as a result of the compensation, benefits, and incentives provided to them, everyone wins (Casio, 2010)!

Cascio, W. F. (2010). Managing human resources: Productivity, quality of work life, profits (8th ed.) New York, NY: McGraw-Hill/Irwin.

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Employee Compensation and Benefits. (2016, Jun 11). Retrieved from

Employee Compensation and Benefits
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