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Direct and Indirect Compensation

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Direct and Indirect Compensation

Page 1 of 15

“If employee undervalue the cost of benefit, why should a company not drop benefit and simply add more direct compensation” Do you agree or disagree with this statement? Explain using relevant organizational examples. CONTENTS

1. Introduction3
2. Findings and Analysis
2.1 What is employee benefit?4
2.2 What is compensation?---- Critical analysis of compensation components and its function in an organization?6 2.3 Total Reward Management8
2.4 Critical analysis of motivation.10
3. Conclusion12
1. Introduction

There is a common phenomenon in the workforce----employee underestimates his or her cost of benefit, for some employers they will still retain the benefits and easily supplement more direct compensation to the unsatisfied employees in order to attract them. Actually, benefits are forms of value, other than payment, that are provided to the employee in return for their contribution to the organization, that is, for doing their jobs. Employee benefits typically refers to insurance, (Example 1)such as retirement insurance, health life insurance, disability insurance, vacation, employee stock ownership plans, etc .The reason why employees are unhappy of their cost of benefit is associated with company’s total reward management. Firstly, it will probably relate with employee’s misunderstanding or lack of communication of benefit value. (Example 2) "Too many employees today don't really understand their benefits packages," says Marianne Adams, assistant vice president of enrollment services at Colonial Life & Accident Insurance Company. (Example 3) “With more costs and decision-making being shifted to employees, benefits communication and education is more important than ever,” says Randy Horn, president & CEO of Colonial Life. Secondly, benefit undervaluation is also likely related to the thorough understanding and flexible application of...