COMPENSATION AND BENEFIT SYSTEM

Is it necessary for a company to have compensation and benefits plan? The answer is YES! Why? Nowadays, employees look for compensation that goes beyond cash when considering whether a job offers them security, stability and a bright future. Hence a well-considered benefits and compensation can also retain quality employees in the organization.

Compensation is an earned income for work performed such as wages, salaries, tips, bonuses, and commissions. Benefits are cash and non-cash rewards in addition to compensation. Benefits include health insurance, paid time off, wellness program, pension, and others.

Actually, the strategy plan for compensation and benefits play a large role in attracting and maintaining competent employees. Employees with more experience and competencies will attract to work with company if they provided with this system. Moreover, when competence employees work in our organization, it leads to increase the tendency for the organization to get higher productivity.

Besides that, one of the strategy plans an organization can do is by including reward for the employees based on workplace performance. Commission-based system rewards employees for total amount of sales or for consistent positive feedback from the customers is one of the assessments of their performance. This benefits system should be easy for employees to understand and attainable to encourage the employees to work hard to achieve the goals. 

 

Other than that, compensation and benefits system is useful in retaining the quality employees. Company can use compensation based on seniority in order to shows to the new employees that the organization values employees who choose to remain and stay with the company for long-term period. Thus, intrinsically it will encourage new employees to have high commitment level towards the company.