Compensation and Benefits

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Compensation and Benefits:
Methods, Strategies and Performances
LaTonya Hopes
This paper is submitted in partial fulfillment of the requirements for Human Resource Administration
BUS 5273-50
Texas Woman's University
School of Management
Dr. Derek Crews
February 8, 2013

Table of Contents

Abstract ……....................................................................................................................... 3 Introduction ……………………………………………………………………………………. 4 Literature Review ……………………………………………………………………………. 5 Discussion ………………………………………………………………………………………. 9 Conclusion …………………………………………………………………………………….. 10 References ……………………………………………………………………………………. 12

ABSTRACT

This paper explores compensation strategies within organizations including an analysis of the impact of various compensation methods, strategies related to organizational performance and benefit programs for employees. Employee compensation, which covers all forms of pay or rewards has become more complex in recent years and since compensation comprises the largest expense for most organizations it is important for managers to understand how to effectively manage compensation-related activities. Compensation and benefit strategies are ways that organizations can use pay and benefits to recognize and reward employees’ contributions to company’s success. There is a wide variety of pay practices in use by employers today. Some of the most common practices include the use of benefits, compensation philosophies, and tying performance to compensation rewards. Organizations continue to find the best solutions to motivate their workforces and get the greatest return on their investments. The findings below highlight consistencies in some of the most common compensation programs and practices and how they vary from one another.

Human resources managers strive to adopt strategies to enable them to manage work forces effectively as the economy and technology faces rapid changes. These managers, similar to their counterparts in marketing, finance, and production, develop human resources that require defining the workforce performance goals needed to support the organization's business strategy. Implications of these goals including diagnosing the organization's internal and external environment, pinpointing human resources strengths and weaknesses relative to these goals, designing the mix of human resources policies and programs that exploit strengths and downplays or corrects weaknesses and aim to shape a workforce focused on strategic performance goals capable of achieving them (Milkovich & Broderick, 1989). Compensation and benefit strategies are tools that organizations use to pay and provide benefits in recognition and reward employees for their contributions toward the organization’s success (Noe, Hollenbeck, Gerhart, & Wright, 2004). Some examples include vacation leave administration, profit sharing, stock plans, incentive pay, wage and salary administration, insurance and retirement plans. To gain a better understanding of these programs and how they affect organizations, it is necessary to take a closer look at compensation methods and benefit programs. There are two basic components to any compensation and benefits package. The first is how much a person will get paid for services rendered and the second is what type of remunerations are given to the employee from the organization. Wages is how much money an employee will make either weekly or bi weekly. The amount that is given to an employee is normally based on the skills required to perform the job as well as any degrees held or specialized training required. Benefits are incentives organizations provide to employees that normally include health and wellness packages, savings programs and work balance.

Compensation includes:
* Direct financial compensation consisting of pay received in the form of wages, salaries, bonuses and commissions provided at...
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