Compensation and Benefits – All about the Carrot, not the Stick!
To understand the whole area of Compensation and Benefits (C&B) you really need to understand the evolution of administrative and passive “Personnel Management department” to a more dynamic and specialised “Human Resource Management” team. With increased free market competition at global level, the proliferation of technology and knowledge-based industries, Human Resource Management has become a critical function of most large organisations.The Human Resources team has evolved one stage further - If you review larger companies you will find that they are typically divided into three sub-divisions: HR business partners (HRBPs), HR centers of excellence, and HR shared services.C&B is one such center of excellence and is being given an increasing amount of attention and with good reason! And what exactly is C&B? As a sub division of HR, C&B it is focused on employee compensation and benefits policy-making. While compensation and benefits are tangible, there are intangible rewards such as recognition, work-life and development. Combined, these are referred to as total rewards. Employee compensation and benefits are divided into four basic categories: Guaranteed pay – a fixed monetary reward paid by an employer to an employee. The most common form of guaranteed pay is base salary. Guaranteed pay also includes cash allowances (housing allowance, transport allowance, etc.), differentials (shift differentials, holiday differentials) and premiums (overtime, night shift, etc.) Variable pay – a non-fixed monetary reward paid by an employer to an employee that is contingent on discretion, performance, or results achieved. The most common forms of variable pay are bonuses and incentives Benefits – programs an employer uses to supplement employees’ compensation, such as paid time-off, [...]