Benefits and Compensations Package

free essayCompensations and benefits are very crucial HR constituents in all types of organizations. Compensations and benefits relate to how a firm, with the help of its HR department, manages the personnel expenses budget and ensures transparency of compensation policies besides introducing competitive benefits for employees (Oliphant & Wagner, 2012).

Purpose of Compensations and Benefits from the Organization’s Viewpoint

From the organization’s point of view, compensations and benefits help to ensure transparency of human resource functions. They are also key in rewarding employees for their performance. Compensations and benefits are the tools that managers can use to distinguish employees based on their performance. As such, it helps to motivate employees to work hard so as to qualify for the available benefits. In this way, a firm ends up building a highly performing corporate culture (Oliphant & Wagner, 2012).

The compensations and benefits department keeps an eye on the external job market in order to optimize the expenses incurred due to the personnel. Any organization’s compensation strategy is determined by benefits plans. This strategy helps create fair and transparent compensation policies besides just defining extraordinary cases that call for extra payments (Oliphant & Wagner, 2012).

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Compensations and benefits are also helpful for an organization that intends to find and maintain a highly qualified workforce. Businesses also ensure proper timing in the issuance of benefits to their employees. This is done to ensure that the rate of employee turnover is under control. The provision of benefits to employees is perceived as a way of managing high-risk coverage at a minimum cost and easing the financial burden of an organization (Community Foundations of Canada, 2015). A failure to offer satisfactory compensation and benefit plans is likely to lead to several cases of employee turnover that would be expensive for an organization in so far as recruitment expenses are concerned.

Compensations and benefits are also used by businesses as a means of preventing crisis that results from the lack of employee satisfaction in relation to their remuneration (Community Foundations of Canada, 2015). In most cases, employees decide to unionize so as to get a collective bargain for matters relating to payments and the work environments. Community Foundations of Canada (2015) adds that organizations use compensations and benefits as a means of boosting productivity. It is believed that workers are more productive when they are given an assurance of security for themselves and for their families.

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Strategic and Tactical Recommendations that an HR Specialist Might Make to Senior Leaders with Regard to Direct and Indirect Compensation

Understanding how direct compensation differs from the direct one is vital. The latter refers to optional, non-wage compensation that is given to employees in addition to the normal salary or wages (Community Foundations of Canada, 2015). Examples of direct compensation are group insurance, retirement benefits and sick leave. On the other hand, indirect compensation in issued specifically by a particular company.

It is advisable for organizations to align their modes of compensation with their strategic objectives. Firms should adopt indirect compensation that is believed to allow room for a lot of flexibility and creativity, because the changing work environment requires adaptability and originality in the mode of compensation in order for the managers to keep highly skilled employees.


Compensations and benefits help organizations manage their personnel expenses as well as attract and maintain experts. Therefore, companies should adopt indirect compensation in order to benefit from flexibility and creativity. This decision can help them keep real professional.

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