Tips for an effective compensation and benefits plan

Tips for an effective compensation and benefits plan
Nick Mok
What is compensation and benefits?
Compensation and benefits as an HR discipline encompasses the reimbursement of employees by a firm, whether it is financial or non-financial. 

Why is it important?

A quality compensation and benefits scheme can potentially attract candidates and incentivise incumbent workers by ensuring that employees are fairly recognised and rewarded. If they are motivated and happy, productivity and output are likely to increase as well. Benefits to an extent have become more important than the base salary, as people now tend to want insurance, time off work, or a guaranteed pension.

Tips
1.    First, for a compensation scheme to be effective, the base salary must be competitive, roughly on par with your competitors.

2.    Once you have a competitive base salary decide how to go forward from there, in accordance with your company's core values and philosophy. For example, if your company is very focused on its employees, utilise benefits to ensure work-life balance.

3.    Identify what sort of benefits your potential candidates or employees may want. More senior employees may want a guaranteed pension or insurance. Younger employees or candidates are possibly more likely to ask for days off work or healthcare, but these aren't hard facts – every individual is different.

4.    Adjust compensation and benefits for the often overlooked problem that is geography. For example, people in London are more likely to face higher living costs, compared to someone living in Glasgow.

5.    Offering non-pecuniary benefits is also a good way to retain your employees, as happier and healthier employees can work for longer, while producing better work. 

6.    Ensure every individual's salary and benefits reflect their personal qualifications. If someone is able to contribute more to your company than someone else, paying them the same amount is likely to cause tension.

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