Current Trends in Employee Compensation and Benefits



Table of Contents

Introduction3

Discussion3

Pay for Performance4

Compensation and Business Goals4

High Performer Create Examples5

Larger Variable Pay and Smaller Merit Pay Budgets5

Creative Breakouts of Budget5

Compensation Benchmarking6

Increased Non-Monetary Rewards6

Replacement Cost6

Increased Focus On Retention7

Extra Pay Restrictions7

Improved Communication with the Employees7

Frequent Updates of Compensation Policy8

Benefits8

Conclusion9

References10

Current Trends in Employee Compensation and Benefits

Introduction

This paper discusses the current trends in the compensation and benefits for employees. It is becoming of key importance since it is the basic factor that brings, motivation and retains talent in the organization. It is said that, resources make things possible, but it's the humans who make things happen. Considering the importance of human resource and its role in bringing the organizational prosperity after recessionary periods, companies should do assessment of the trends in the competitive environment and internal assessment of their employees' expectation to effectively revise the policies and practices in the realm of compensation and benefits management. It is important to make appropriate changes and adjustments in the HR policies to effectively retain the talent in the firm.

Discussion

The compensation and benefits trends throughout the globe are affected by recession right in the recent past. Many markets are creating what is known as “soft patch” (MERCER, 2012). Organizations in stable economies are also facing the new challenges related to inflation and talent retention (MetLife. 2012). Today the environment is characterized as highly dynamic and trends are not long lasting. Therefore, organizations need to identify the latest trends in order to affect the HR strategy accordingly in order to attract, motivate and retain the talented employees. The hot questions are whether to base more emphasis on base pay or the benefits and incentive, or should we base the main importance on training and development of employees.

In the realm of compensation management, the trend is predicting a modest wage growth with steady movement over the next few years. The low profits are expected to be stopped and so as the layoffs by the recession. He economy is facing the way to recovery and so is the trend reflecting in compensation practices. The modest rise in pay is expected this year. However, the expectation of employees are telling a different story as the Forbes story predicts that employee are looking green pastures after long period of recession and burns on their dreams. Now these employees will look for backlash if the trends did not translated into promising increases in compensation. It further advices the corporations to adjust their compensation policies as soon as possible otherwise they will be left behind in the trend.

There are some trends which are to be taken into account specifically.

Pay for Performance

Companies are continuously striving to relate the performance with the pay. It is in trend and will continue that companies will increase focus on basing the pay of employees on their performance. A Mercer report predicts that the difference between the low performing employee and high performing employee is increasing which is a reflection of this trend (The HR Specialist. 2012).

Compensation and Business Goals

It is necessary ...