Compensation And Benefits Essay

1243 WordsMay 1, 20125 Pages
HRM430: Compensation & Benefits Intro An excellent compensation plan must have a well-designed package that motivates employees, control compensation costs, and ensures equity. The best compensation plans mirror the culture of the employer. Along with their compensation plan, a benefits program should also be part of an employer’s compensation strategy. When establishing a compensation plan, a few things should be the norm: Easy to Read: A good compensation plan should be easy to read and understand. As a general rule, the more complicated a compensation plan is, the harder it is to explain. “If your prospects can see that your compensation plan is easy to understand and explain, they themselves will feel more confident in their ability to join you organization”. (Rocavert, T. 2007) Proven Track Record: Having a good track record usually identifies a company that has a good business model and has a fair chance of being in good financial position. Evenly Weighted: The best compensation plan should not be overly weighted (i.e. front-end loaded) towards signing new associates. In some cases these type of pay plans border on pyramid schemes. These types of compensation plans make it hard to earn a good income without having to constantly recruit new talent. Even after achieving a level of success with these plans you will find it difficult to earn a passive income. Human resource management within the company needs to establish a plan that will help solidify employees loyalty to their company by offering a more competitive compensation and benefits package. Compensation presents a particular challenge because packages must be extremely competitive and should provide adequate incentives to motivate employees to do their best. As is stated in our text, “Compensation represents both the intrinsic and extrinsic rewards employees receive for performing their jobs.

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