Compensation and benefits are very important perks for all employees who work hard for the growth and survival of the company.
Every human resource expert knows that there are two things that every employee wants to have -job satisfaction and job security. The first one is based on the kind of work the employee is doing. If it is fulfilling then they will continue to give their best to the company.
On the other side, job security is based primarily on compensation and benefits that employees get. Further, adding benefits to the remuneration process significantly boosts their ability to perform on the job. If you are a young entrepreneur trying to set the standard for employee remuneration, the following 5 reasons will tell you why this is an important consideration:
What is The Purpose of Compensation and Benefits in HRM?
1. Improves Work Motivation
Employees may join your company for the sake of career growth or the great culture, but their primary motivation will always be the pay. If you are starting a new business, then competitive salaries will help you recruit the best in the market. This is particularly important for higher-ended positions which require experienced professionals at the helm. When you have this human resource, your business is likely to do a lot better. Competitive compensation and benefits also allow for better target incentivization. This leads to better outcome and greater production volumes in the short as well as long term.
2. Improves Self Validation
All employees like to feel that they are contributing something valuable to the organization and the best way to see this is through the benefits. Normally, holidays and related incentives are a great way to promote employee satisfaction. However, other benefits which are based on performance and related appraisals can be an even more valuable motivational tool. For example, in entry-level jobs, using an employee of the month processes can help in developing a closer relationship among the workers of that business. This also generates competitive value aside from compensation and benefits along with potential for promotion and related monetary compensation. Naturally, this results in better employee retention and work output.
3. Improves Goodwill | Compensation and Benefits
Maintaining goodwill among employees boils down to providing monetary compensation and developing strong relations with them for ongoing and future prospects. Workers can attain their posts, get promoted or move to other businesses and in all of these, the company stands to gain some degree of goodwill. The consideration here is regarding the kind of benefits which generate long-standing goodwill among employees. This will also have to do with the work culture and team dynamics. However, all of this is first padded on the basis of the compensation that you provide to your employees. Therefore, this is the foundation on which your company goodwill with your employees will be made.
4. Improves Employee Attendance
Aside from timely payment of salaries, additional benefits like dental and Medicare can help improve employee attendance. When employees know that they are covered, they can put out a far better performance. This is a result of being able to rely on the company to handle their immediate expenses. Further, when employees have these compensations and benefits, they are much more likely to be willing to come back to work. This also improves employee morale and ensures that they can be retained for longer periods.
5. Improves Hiring Potential
This is the cumulative benefit of all the above mentioned advantages of establishing employee-favouring compensation models. When hiring new employees, companies need to rely on their existent employee management policies to attract the right kind of professionals. As said before, this helps in filling up mid to top-level jobs which demand experienced professionals with specialized skills. This also leads to social media opportunities where such recruits can promote company content or post advertising campaigns.
Conclusion | Compensation and benefits
Compensation and benefits for employees and providing additional benefits of time is a great way to develop the right kind of rapport with them. This helps in building the long term prospects of the company and generates the kind of work culture which can be leveraged as an asset in itself. This will help your business develop at a far better pace and with more long-term asset viability as well.