Total Compensation Methods Paper
The purpose of this paper is to provide an analytical overview of compensation strategies within organizations. First, an analysis of the impact of various compensation methods and benefit programs on employees and organizations will be discussed followed by how salary and benefit administration strategies relate to organizational culture and performance. What are compensation and benefit strategies? Compensation and benefit strategies are ways that organizations can use pay and benefits to recognize and reward employees’ contributions to the organization’s success. (Noe, Hollenbeck, Gerhart, and Wright, 2004) Some examples are wage and salary administration, incentive pay, insurance, vacation leave administration, retirement plans, profit sharing, and stock plans. In order to gain a better understanding of these programs and how they impact organizations, a comprehensive look at compensation methods and benefit programs is necessary. A company has many options when it comes to compensation methods. Compensation not only affects the company, but also the employee and future employees. Some compensation packages that a company offers are required by law and others are a benefit to employees. This paper will look at both types of compensation. In addition to compensation and pay, one of the biggest compensation packages a company can offer is employee benefits. Employee benefits are compensation in forms other than cash. (Noe, Hollenbeck, Gerhart, and Wright, 2004) Employee benefits include, but are not limited to, medical insurance, dental insurance, vision insurance, time off for illness, paid time off, retirement plans, childcare, and tuition reimbursement. Employee benefits not only help with family and personal needs, they also help retain and motivate employees. Furthermore, strong benefit packages can attract new employees that could be beneficial in the company’s future success.
One of the biggest compensation packages that are required by law is Social Security. Social Security is the federal Old Age, Survivors, Disability, and Health Insurance (OASDHI) program, which combines old age (retirement) insurance, survivor’s insurance, disability insurance, hospital insurance (Medicare Part A) and supplementary medical insurance Medicare Part B) for the elderly. (Noe, Hollenbeck, Gerhart, and Wright, 2004) Social Security is a shared cost between the employer and the employee. The law sets the amount that is paid into this compensation plan so that employers cannot require employees to contribute more than what is required. Social Security also provides piece of mind to an elderly employee and helps take some of the financial burden off of retiring. Another compensation benefit that is required by law is unemployment insurance. Unemployment is a federally mandated program that will protect an employee if they should lose their job. Unemployment insurance helps take some of the financial burden off of an individual while they are looking for a new job. Employers must pay for unemployment insurance. In order to qualify for unemployment, an individual must meet four conditions. An employee must show proof of employment, proof that he or she is available for work, be actively seeking new employment, and proof that they were not let go form their former job because of willful misconduct. The individuals that meet the requirements typically receive earnings for up to 26 weeks. (Noe, Hollenbeck, Gerhart, and Wright, 2004)
Workers compensation is a state - sponsored program that provides benefits to workers who suffer work-related injuries or illnesses while on the job. These benefits are also payable to an employee’s survivors. (Noe, Hollenbeck, Gerhart, and Wright, 2004) This compensation method has four major categories: disability income, medical care, death benefits, and rehabilitate services. The amount that is paid to employees varies per sate. Each state has its own law regarding...
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