Also see the Related Info including Benefits.
The basic components of employee compensation and benefits[ edit ] Employee compensation and benefits are divided into four basic categories: Guaranteed pay — a fixed monetary cash reward paid by an employer to an employee.
The most common form of guaranteed pay is base salary. Guaranteed pay also includes cash allowances housing allowance, transport allowance, etc.
Variable pay — a non-fixed monetary cash reward paid by an employer to an employee that is contingent on discretion, performance, or results achieved. The most common forms of variable pay are bonuses and incentives. The most common examples are stock options.
Guaranteed pay[ edit ] Guaranteed pay is a fixed monetary cash reward. The basic element of guaranteed pay is base salary which is paid on an hourly, daily, weekly, bi-weekly, semi-monthly or monthly rate.
Base salary is provided for doing the job the employee is hired to do. The size of the salary is determined mainly by 1 the prevailing market salary level paid by other employers for that job, and 2 the performance of the person in the job.
Many countries, provinces, states or cities dictate a minimum wage. In addition to base salary, allowances may be paid to an employee for specific purposes other than performing the job. These can include allowances for transportation, housing, meals, cost of living, seniority, or as payments in lieu of medical or pension benefits.
The use of allowances varies widely by country, as well as job level and the nature of job duties. Variable pay[ edit ] Variable pay is a non-fixed monetary cash reward that is contingent on discretion, performance, or results achieved.
There are different types of variable pay plans, such as bonus schemes, sales incentives commissionovertime pay, and more. An example where this type of plan is prevalent is how the real estate industry compensates real estate agents.
Sometimes this type of plan is administered so the sales person never resets or falls down to a lower level. Benefits[ edit ] There is a wide variety of benefits offered to employees such as Paid Time-Off PTOvarious types of insurance such as lifemedicaldentaland disabilityparticipation in a retirement plan such as pension or kor access to a company car, among others.
Some benefits are mandatory which are regulated by the government while others are voluntarily offered to fulfill the need of a specific employee population. In the United States, "qualified" employee benefit plans must be offered to all employees, while "non-qualified" benefit plans may be offered to a select group such as executives or other highly-paid employees.
When implementing a benefit plan, HR Departments must ensure compliance with federal and state regulations. The most common form is stock optionsyet employers use additional vehicles such as restricted stockrestricted stock units RSUemployee stock purchase plan ESPPand stock appreciation rights SAR.
A stock option is defined as "a contract right granted to an individual to purchase a certain number of shares of stock at a certain price and subject to certain conditions over a defined period of time.
That could be a schedule that is controlled by the employee and can be adjusted to accommodate occasional non-work activities, or one that is highly predictable, which makes it easier for the employee to arrange childcare or transportation to work. Access to training programs, mentorship, opportunities to travel or to meet other people in the same field, and similar experiences are all intangible benefits that may appeal to some employees.
A strategic plan for employee compensation determines how much you want to pay employees and what type of employees you want to attract. Your compensation plan entails a variety of aspects including pay scales, reward programs, benefits packages and company perks. Total Compensation Methods Impact of various compensation methods and benefit programs on employees and organizations. The compensation term is used for the combination of salaries, benefits and wages for the employee. Benefit Programs and Compensation Administration Essay Sample. Employee benefits are one of the most driving measures for obtaining qualified employees.
Pay aggregates[ edit ] Various combinations of the above four categories are referred to as pay aggregates. Common aggregates are explained below. Together, guaranteed and variable pay comprise total cash compensation.
The ratio of base salary to variable pay is referred to as the pay mix. Total guaranteed package or fixed cost to company are aggregates that include guaranteed pay and benefits. This represents the total fixed cost of the reward package and is useful for budgeting.
All forms of variable pay annual bonus and equity compensation are excluded from this aggregate.
Total direct pay refers to total cash compensation plus equity compensation.A strategic plan for employee compensation determines how much you want to pay employees and what type of employees you want to attract.
Your compensation plan entails a variety of aspects including pay scales, reward programs, benefits packages and company perks.
Total Compensation Methods Impact of various compensation methods and benefit programs on employees and organizations. The compensation term is used for the combination of salaries, benefits and wages for the employee. employee compensation system, the focus of this chapter, plays a major role in efforts to manage human & Wright, ).
Health care has been the fastest growing benefit, and most employers describe the challenge of controlling this cost while providing quality coverage as one of their Specific pay programs that influence pay mix are.
Effective Employee Benefit and Compensation Program Words Jan 15th, 7 Pages Work force planning is a similar human resource tool that facilitates an organization long term accomplishment and sustainability.
Compensation managers plan, develop, and oversee programs to determine how much an organization pays its employees and how employees are paid. Benefits managers plan, direct, and coordinate retirement plans, health insurance, and other benefits that an organization offers its lausannecongress2018.com-the-job training: None.
Benefit Programs and Compensation Administration By: Janelle Bartlett Professor Rhonda Hess October 28th, Compensation & Benefits Essay Running Head COMPENSATON AND BENEFITS Compensation and Benefits in the Twenty-first Century Abstract Team platinum will explore compensation and benefits in the 21st century.