Compensation and Benefits

Compensation and get aheads From Wikipedia, the free encyclopedia (Redirected from Compensation & Benefits) Jump to navigation, search Compensation and benefits (abbreviated C&B) is a sub-discipline of human resources, focus on employee stipend and benefits policy-making. It is also known in the UK as total reward and as remuneration in Australia and New Zealand.Contentshide * 1 The basic components of employee wages and benefits * 2 Variable pay * 3 Benefits * 4 Equity-based wages * 5 Organizational place * 6 Main influencers * 7 gift send offs edit The basic components of employee compensation and benefits Employee compensation and benefits ar basically divided into four categories 1. Guaranteed pay monetary (cash) reward salaried by an employer to an employee based on employee/employer relations. The roughly common rebound of guaranteed pay is the basic salary. . Variable pay monetary (cash) reward paid by an employer to an employee that is contingent on discretion, exploit or results achieved. The closely common forms are bountyes and sales incentives. 3. Benefits programs an employer uses to supplement employees compensation, such(prenominal) as paid quantify-off, medical insurance, company car, and more. 4. Equity-based compensation a end using the employers share as compensation. The most common examples are stock options. Guaranteed pay Guaranteed pay is a monetary (cash) reward.The basic element of the guaranteed pay is the base salary, paid based on an hourly, daily, weekly, bi-weekly or a monthly rate. The base salary is typically used by employees for ongoing consumption. Many countries dictate the minimum base salary defining a minimum wage. Individual skills and level of experience of employees leave room for differentiation of income-levels within the job-based pay structure. In addition to base salary, there are otherwise pay elements which are paid based solely on employee/employer relations, such salary and seniority all owance. edit Variable pay Variable pay is a monetary (cash) reward that is contingent on discretion, performance or results achieved. There are different types of variable pay designings, such as support schemes, sales incentives (commission), extra time pay, and more. An example where this type of compensation plan is prevalent is the real estate industry and real estate agents. A common variable pay plan might be the sales person receives 50% of every dollar they bring in up to a level of revenue at which they thence bump up to 85% for every dollar they bring in going forward.Typically, this type of plan is based on an annual period of time requiring a resetting each year back to the starting point of 50%. Sometimes this type of plan is administered so that the sales person neer resets and never falls down to a lower level. It also includes Performance Linked Incentive whcih is variable and may range from 130% to 0% as per performance of the indiviudal as per his KRA. edit Bene fits There is a wide variety of employee benefits, such as paid time-off, insurances (life insurance, medical/dental insurance, and field of study disability insurance), pension plan, company car, and more.A benefit plan is intentional to address a specific need and is often provided non in the form of cash. Many countries dictate different minimum benefits, such as minimum paid time-off, employers pension contribution, sick pay, and more. edit Equity-based compensation Equity based compensation is an employer compensation plan using the employers shares as employee compensation. The most common form is stock options, yet employers use additional vehicles such as restricted stock, restricted stock units (RSU), employee stock purchase plan (ESPP), and stock appreciation rights (SAR).The classic objectives of equity based compensation plans are retention, attraction of new hires and aligning employees and shareholders interests. edit Organizational place In most companies, compensa tion & benefits (C&B) is a sub-function of the human-resources function. HR organizations in big companies are typically divided into three HR business partners (HRBPs), HR centers of excellence, and HR shared services. C&B is an HR center of excellence, like staffing and organizational development (OD). edit Main influencersEmployee compensation and benefits main influencers can be divided into two internal (company) and external influencers. The most important internal influencers are the business objectives, labor unions, internal equity (the idea of compensating employees in alike(p) jobs and similar performance in a similar way), organizational culture and organizational structure. The most important external influencers are the state of the economy, inflation, unemployment rate, the relevant labor market, labor law, tax law, and the relevant industry habits and trends. edit Bonus plans Bonus plans are variable pay plans. They have three classic objectives 1. Adjust labor cost to financial results the basic idea is to create a support plan where the company is paying more bonuses in untroubled times and less (or no) bonuses in bad times. By having bonus plan budget adjusted according to financial results, the companys labor cost is automatically reduced when the company isnt doing so well, while good company performance drives high bonuses to employees. . Drive employee performance the basic idea is that if an employee knows that his/her bonus depend on the occurrence of a specific event (or paid according to performance, or if a certain goal is achieved), then the employee will do whatever he/she can to secure this event (or improve their performance, or achieve the desired goal). In other words, the bonus is creating an incentive to improve business performance (as defined through the bonus plan). 3.Employee retention retention is not a primary objective of bonus plans, yet bonuses are thought to bring value with employee retention as well, for t hree reasons a) a well designed bonus plan is paying more money to better performers a competitor offering a competing job-offer to these top performers is likely to face a higher hurdle, given that these employees are already paid higher due to the bonus plan. b) if the bonus is paid annually, employee is less inclined to leave the company before bonus payout often the reason for leaving (e. g. dispute with the manager, competing job offer) goes away by the time the bonus is paid. he bonus plan buy more time for the company to hold on the employee. c) employees paid more are more satisfied with their job (all other things being equal) thus less inclined to leave their employer. The concept saying bonus plans can improve employee performance is based on the work of Frederic Skinner, perhaps the most influential psychologist of the 20th century. Using the concept of Operant Conditioning, Skinner claimed that an existence (animal, human being) is shaping his/her voluntary behavior b ased on its extrinsic environmental consequences i. . reinforcement or punishment. This concept captured the heart of many, and indeed most bonus plans nowadays are designed according to it, yet since the late 1940s a growing body of empirical evidence suggested that these if-then rewards do not work in a variety of settings common to the modern workplace. Research even suggested that these type of bonus plans have the potential of damaging employee performance. Retrieved from http//en. wikipedia. org/w/index. php? title=Compensation_and_benefits&oldid=478107814 shot page ratingsRate this page Rate this page Page ratings Whats this? Current average ratings. 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