COMPENSATION AND BENEFITS

Compensation and Benefits Strategy



Compensation and Benefits Strategy

Introduction

The role of compensation and benefits has experienced an increasing role, from being an unknown issue to be one of the significant challenges and tasks within the Human Resources Department. From an organizational point of view, it is essential for the management to develop strategies based on internal equity and external competitiveness. Such strategies need to address all aspects of compensation, and consider methodologies that allow employees to confront situations of management remuneration (Gomez-Mejia 2008).

The subjects addressed in an integrated manner, taking into account tax implications and the impact on the income of the company. The performance of effective management facilitates greater integration of human resource function in the strategy of the company. It is essential for new start ups to consider that employees relate satisfaction with pay, because the socioeconomic benefits, present in the collective agreement or individual contract, play a significant role in the workplace.

Compensation and Benefit Challenges in Creative Products

A company's compensation system operates in terms of cost/benefit that is, the expected result of an investment in return to incentives. Creative Products is a new company, which faces the challenge to provide the best compensation and benefits to its employees with regards to cost. The company provides a range of kitchen appliances and other homecare products. The company needs to plan for higher basic wages, gain sharing or bonus, employee old age benefit and other allowances such as medical reimbursement. In addition, the company can also incorporate flexible working hours, paid leaves, and sick leaves, and insurance into its plan.

It has been a trend since a number of years that organizations develop strategies to meet the need for money for the employees, but that does not respond to the loss of purchasing power caused by inflation (American Management Association 2006). People want to have compensation that allows them to purchase goods and services without implying additional sacrifices. Therefore, employees want to have additional benefits other than increase in salaries because they know that the increase does not cover the loss of real value of income. As a result, the employees want the company to make additional efforts in the form of other benefits.

Recommendation

Payment for labor, as a result of social production, determines the legal mechanism for distributing the product of labor between the employee and the employer. The distribution takes place through the following points. First, part of the product is distributed according to the magnitude of work performed by an employee in the manufacturing process. This provides an incentive of workers in a complete, intense and productive use of their time. Second, labor gets payment according to their qualifications, so that skilled and unskilled labor can be differentiated (Thomason 2001).

It also motivates workers to have professional development, increase educational level, and gain professional skills. Third, those employees who work in hazardous conditions need to have higher wages than workers who work in normal conditions. On the other hand, Creative Products would need to provide focus ...