Answer to Question #270428 in Management for jean

Question

How do you think companies compete with one another in relation to their compensation and benefits packages?

Answer 1

Discussion

One way businesses attract and retain top talent is by offering comprehensive compensation and benefits packages. What the organization provides depends on the budget available, the size of the company, and what the employees value most. While larger firms and government employers tend to provide comprehensive compensation packages, small businesses tend to start with a few elements and build on those as business allows. Below are some ways in which companies compete with one another in relation to their compensation and benefits packages;

• Salary

A competitive compensation package includes salaries that are at market or above. If the company can’t be at or above market on salary, it can make up for it by being generous in other categories. For instance, the company can start the process by identifying all current and planned jobs at the company, defining the associated work and establishing salary ranges that match all of the job descriptions. To determine salary ranges, research and analyze the competitive salary ranges for all relevant jobs based on geographic location. Identifying salary ranges ensures that pay is competitive with other organizations. As the company considers pay, it will want to look at bonuses and commissions as well start-ups. 

• Employee benefits; Insurance

At a minimum, companies try to offer health insurance, vision, and dental insurance and cover a portion of the employee’s premium. There are a variety of insurance options to include in a comprehensive compensation package. The most popular is healthcare insurance. When providing healthcare coverage, a company can choose to cover 100% of the premium or a percentage, with the employee paying the other portion. Businesses may also choose to offer coverage to just the employee or to the employee as well as family members. Other types of insurance that can make a company benefits package more attractive are short-term and long-term disability, dental, and vision insurance. 

• Vacation policy; Paid time off

The average employer provides nine paid holidays. One way to set a company apart is by offering more paid holidays than other employers, or by allowing employees one floating holiday each year that they may use for a holiday that the company does not observe. Paid time off (PTO) generally consists of specific allotments of time for paid time off that cover vacation, sick and personal days. Instead of maintaining different policies and PTO balances for each type of time off, some businesses have adopted a PTO program that awards employees a specific number of paid leave days that employees can use for any purpose.

Reference

Osibanjo, A. O., Adeniji, A. A., Falola, H. O., & Hiersmac, P. T. (2014). Compensation packages: a strategic tool for employees’ performance and retention. Leonardo Journal of Sciences, 25, 65-84.