Human Resource Management - Research Paper Example

Introduction Before going into the discussion regarding compensation and benefits, which is one of the most specialized parts of the human resource management, let us get a better understanding of the importance of a well-structured compensation plan in maintaining a productive workforce. A compensation plan is a set of those rewards, remuneration, and benefits, which are provided to the employees by the HR department of the company in order to increase employee productivity. Compensation plans not only help the companies retain skilled employees but also assist HR staff in recruitment processes.

Obringer (n.d.) asserts, “To make your company competitive and attractive to job candidates, you have to offer an exceptional total benefits package”. The thesis statement for this paper is, “Why is it important for a company to offer a well-structured compensation plan to its employees?” Importance of Compensation Plans Compensation and benefits play an important role in making a company achieve increased employee productivity. A well-structured compensation plan is one of the key motivating forces behind increased productivity.

If human resource department of a company offers a competitive compensation plan to the employees as a reward for their individual performances, the employees become motivated and they put their efforts to do more for their company. Employee efficiency and organizational productivity depend directly on the types of compensation that are offered to the employees by the company. It is a common fact that the employees like to work for such companies, which give value to the employees’ needs and demands by offering them attractive compensation plans.

Keimig (2008) asserts, “Generous benefit packages (especially those with an emphasis on health insurance and retirement savings) tend to attract employees who are looking for long-term, stable positions”. A well-structured compensation plan needs various factors to be considered during development, which include type of the compensation plan, conditions for plan implementation, payment calculation method, culture of the organization, and practicalities of the compensation plan. Some of the main reasons behind the need to design and implement a well-structured compensation plan include increasing employees’ moral, ensuring internal and external equity, reducing the turnover, encouraging employees’ performance and productivity, increasing employees’ loyalty, hiring and retaining skilled staff, and making the employees satisfied with their jobs.

Dalton (n.d.) states, “The employee's family can also receive benefits, should the employee die as a result of the injuries or illness sustained at the company”. Another reason for implementing an appropriate compensation plan is to succeed in today’s competitive markets. It is the 21st century and the level of competition between the companies has reached its heights. Implementation of compensation plans play a valuable role in making the companies excels in the markets. Therefore, it is extremely important for the companies to hire and retain skilled employees in order to get competitive edge over the competitors.

Why Is It Necessary To Have A Compensation Plan? It is very necessary for a company to implement a compensation plan because it increases productivity of the workforce. We can hardly find any employee who is not interested in getting higher pays and