Employee Benefits vs. Cash Compensation

Employees are driven by a numerous motivators to stay in the company, but the biggest is simply getting a regular paycheck. Ensuring that the compensation system is effective is not just important but critical. A few organizations evaluate their compensation system to identify any shortcomings. It is always important to look at how the organization can improve its compensation strategy to attract the best candidates who can innovate and lead the company in the industry. In order to retain high performing employees, the compensation plan should offer more than just a competitive salary. A good example is Costco and Walmart, on the benefits side, 82% of Costco employees have health-insurance coverage, compared with less than half at Wal-Mart.

carefully planned out and considered, the total closure or failure of the organization could be at hand in the near future. In our modern age, employers know that salary is not the only factor that should be considered and that salary alone will not lead to better or more highly profitable workers alone. This is why compensation planning is important and why pay should have some connection between performance and compensation. This is why the human resources department should consider many monetary and non-monetary factors when considering how to properly compensate and motivate employees (Dessler, 2013).

This report examines 3 different compensation systems that our company can develop and enforce within our company for our employees. Compensation is the most important and rewarding factor for employees, so a thorough and thoughtful approach should be taken as we think about changing the way in which this company rewards it's employees for the work they do for us each and every day.

Employee benefits are a key aspect of an organization’s total compensation package (Martocchio, 2010). An employer’s total compensation package is defined by Martocchio (2010), as “both the monetary and nonmonetary rewards” offered by an organization (p. 7). The most visible aspect of any total compensation package, is core compensation (Martocchio,

A well-articulated compensation philosophy drives organizational success by aligning pay and other rewards with business strategy. It provides the foundation for plan design and administration and anchors current and future plans to the company's culture and values (Kaplan, 2006, p.32). Recognizing and rewarding achievement is the cornerstone of the company A’s compensation philosophy. The mission of the company is to attract, select, place and promote all individuals based on their qualifications. The company believes that performance-based compensation helps attract, develop and retain talented professionals. In addition to base pay which based upon local market conditions and targeted to be above market, the company provides the following types of potential compensation to reward performance:

In a free market, such as the one used in the United States of America, competition between companies is cutthroat as businesses look for every possible way to have the edge over competitors. One of the major ways that businesses stay ahead of the competition is attracting and retaining the most talented employees. It is common practice for companies in the United States of America to provide several non-wage compensations to employees with the aim of sweetening the employment and reducing turnover (entrepreneur.com, n.d). Employees have come to appreciate the benefits offered by companies and consider benefits just as important as their salary.

Employees dedicate a huge part of their time working for a company. A typical full time employee that works 40 hours a week spends about 200 hours per month only at work. This is not including time spent on driving to work and back home. More importantly employees are also valuable asset to the companies; they bring in skills, experience and get the job done. Therefore as forms of payment other than monetary compensations companies offer a variety of benefits intended to help promote financial security and raise living standards. Some of these benefits are statuary and some are voluntary. Mandatory benefits include Social Security, unemployment, insurance, worker’s compensation and family and medical leave. Most benefits such as pensions

The above 14 employee perks are popular, often more so than a pure salary increase. They are attractive because they help the employee succeed better at work and at home – they make life easier and happier. Therefore, companies should pay attention to employee satisfaction – happier employees are more productive. Perhaps more importantly, companies should understand that it isn’t just the paycheck that matters, proper perks can make the workplace seem attractive and help the employees feel passionate about the company and its

Despite the importance of benefits to the compensation area, there has been relatively little empirical research on employee attitudes concerning benefits. For example, it appears that employees tend to undervalue their benefit packages and to underestimate the costs incurred by employers (Wilson, Northcraft and Neale

According to Business Dictionary employee benefits in general, indirect and non-cash compensation paid to an employee. It is also the compensation components or packages made available to employees that provide:

Employee benefits are one of the most driving measures for obtaining qualified employees. It is important for organizations to provide employees with not only hourly or salary wage but also other benefits that can make them more desirable to well qualified individuals. Organizations must be able to communicate all of the benefits to current and prospective employees clearly enough for them to understand exactly what is offered.

Chapter conclusion: Benefits for employees are very important for companies. Benefits for employees include various insurance plans, paid vacation days, paid sick leave, paid days off, etc. Different companies need to establish different benefit plans based on their company conditions. In brief, benefit in one of the bridge between employers and employees.

Employee benefits are a tool used by businesses to attract potential applicants, improve employee satisfaction, reduce turnover and maintain competition. Benefits that most employers offer include, but are not limited to, medical and dental coverage, time away from work, retirement, and additional assistance during life changing events. The majority of employers in the United States offer benefits to their employees and include an annual enrollment yearly to select benefits and make any needed changes.

In today’s competitive workforce, compensation and benefit packages plays a crucial role on recruitment and retention for both the organization and the employee. Bumpbie finds itself in a situation where it could positively affect its employee’s morale, turnover rate and longevity; by making a strategic decision to implement compensation and benefit packages that will encourage current workers to stay and entice new applicants. Money is not always the inherent reason businesses experience high turnover rate, the constant shifting in the job market will always be a contributing factor as well as employee’s moral. Mayhew, R. (2016), explains that an “employee compensation plan” refers to all the components offered as well as the way in which they are paid, and the reason behind the employees getting the compensation case bonuses, salary increases and incentives. The fact that there are voluntary and mandatory benefits that organization provides to their employees give employees the freedom of choice, as well as the option to make the whether to stay with or leave an organization based on the benefits it provides. Variable Pay is also an option that some employers offer their employee which is performance based or results oriented. Whether it is profit sharing, merit based programs or incentive bonuses; it all comes down to which organization can provide employees with the compensation or benefits packages that best satisfy their needs.

Believe it or not, when the phrase employee benefits is mentioned there are many different perspectives from various angles as to what exactly employee benefits entail. Some perspectives are, but not limited to, what is deemed an employee benefit, what benefits are required by law to be given to employees, benefits that employees might feel are superior, and whether or not benefits provide value to the employer. For clarification purposes Alison Doyle offers this, “Employee benefits are non-salary compensation that can vary from company to company. Benefits are indirect and non-cash payments within a compensation package. They are provided by organizations in addition to salary to create a competitive package for the potential employee.” (Doyle, 2016, para. 3). Essentially, this can be taken to mean that employee benefits may be in the form of monetary compensation or still compensation, but without monetary payment to the employee. Examples of employee benefits include, competitive compensation plans, pay for performance packages, flexible work hours policies, and medical leave, which is illustrated in the following scenarios.