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Compensation Strategy - Research Paper Example

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Retaining talented employees is imperative towards the success of a company. The way companies are able to attract and retain employees is by offering a total compensation package. A total compensation package is composed…
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Compensation Strategy
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The human capital of a firm is its most valuable asset. Retaining talented employees is imperative towards the success of a company. The way companies are able to attract and retain employees is by offering a total compensation package. A total compensation package is composed of two parts: salary and fringe benefits. The salary a company offers should be equal or higher than the average salary for a job position. The average salary in the United States is approximately $43,000 per year. Employees that are underpaid have less motivation than workers that are well compensated. The second part of a total compensation package is fringe benefits.
Some of the fringe benefits that a company can offer its employees as part of a total compensation package are vacation and sick days, medical plan, dental plan, profit sharing, stock option plans, maternity and paternity leave, performance bonuses, wellness program, flexible time, and telecommuting. A profit sharing plan divides a percentage of the net income of the company into a pool that is shared equally among the workers, while a stock option plan allows the employees the chance to purchase stocks of their employer at a discounted price (Dol). These two fringe benefits provide incentive to the employees to produce more because the employees will benefit if the company achieves greater profitability. Flexible time gives the employees a chance to set their work hours during a week. The use of a total compensation package helps a company accomplish its goals by providing the employees with greater motivation.
References
Dol.gov. Profit Sharing Plans for Small Businesses. Retrieved March 4, 2013 from http://www.dol.gov/ebsa/publications/profitsharing.html Read More
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