Compensation & Benefits

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Compensation and Benefits in the Twenty-first Century


Team platinum will explore compensation and benefits in the 21st century. Any review of total compensation must include the crucial areas of health and retirement benefits and financial compensation, as well as discuss the implications of pivotal changes in the market and demographics which impact organizations and overall performance management issues. There are several different compensation and benefit strategies that can be combined in innovative ways to meet the needs of the both the organization and the diverse needs of the employees. The proper administration of a total compensation and benefits package is a critical aspect in an organization’s ability to recruit and retain the most qualified applicants in today’s competitive market.

Table of Contents

Compensation and Benefits in the 21st Century4
Base Pay5
Variable Pay6
Retirement & Insurance Benefits9
Benefits Impact9
Advantages and Disadvantages of Retirement Plans10
Insurance Plans Comparison12
Pivotal Change14
Generational Diversity15
Performance Management17
A Tool for Success18
Shared Expectations18
Advantages and Disadvantages19

Compensation and Benefits in the Twenty-first Century
Many of the leading organizations in the 21st century must be competitive in many ways. Due to the fact that a large portion of the money they spend goes to their employees, they must have a system in place that compensates their employees competitively and falls in line with the organizational goals. Organizations must not only determine compensation, but must also determine the benefits that will be offered, consider the changing job market and demographics of the personnel pool, as well as what type of performance management they plan to incorporate in order to succeed. This paper will discuss four segments regarding Compensation and Benefits in the 21st Century. These four segments include: Compensation is an important aspect of Human Resource Management, Benefits are an integral and important aspect of a total compensation plan, the Changing job market and demographics of the personnel pool have a pivotal impact on Human Resources Management, and Performance management is a key facet of organizational success. It is hoped that a better understanding of compensation and benefits is achieved at the conclusion of this paper. Compensation

Webster’s dictionary defines compensation as payment for services such as wages (Webster’s New World College Dictionary, 2006, p.297). According to the book, Human Resource Management, there are three basic forms of employee compensation; they are base pay, variable pay, and benefits (Mathis & Jackson, 2008). Some companies offer compensation packages where these three forms of compensation are combined or grouped together. The book, Salary Negotiation Tips for Professionals, points out that all employees must know what they are worth and make sure the compensation reflects it (Krannich and Krannich, 2005). The next few paragraphs will break down and discuss each of the three forms of compensation. Base Pay

The first type of compensation is base pay. The textbook, Human Resource Management, defines base pay as the “basic compensation that an employee receives, usually as a wage or salary” (Mathis & Jackson, 2008, p.361). Most companies use 2 types of base pay and they are either hourly or salary. The way an employee is paid usually goes by the nature of the job. Hourly pay is based on a time scale. The employee will keep some sort of time sheet and will be paid based on the number of hours worked in either a one or two week period and that is called a wage. Whereas salaried employees are paid a set amount and that amount is the same no matter how many hours they work....
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