Virtual HR Department

Compensation and Benefits

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Compensation and benefits are typically defined as a bundle of financial and non-financial benefits provided to employees for the performance of their jobs and to influence behaviour and effort. The bundle is often over-simplified as being nothing more than a policy, when in fact it is one of the most vital programs an organization has available to support and reinforce its mission and strategic objectives. It is also one of the most important communication tools an organization has available; it tells employees what management thinks of them.
In order to attract, retain and motivate employees, organizations need to create and implement a compensation and benefits structure that rewards the type of performance and behaviours that create competitive advantage and superior operating results. To implement a truly effective program, all aspects of it should enable, motivate and reward productive employee behaviour. 
There are many theories on workplace behaviour and motivation. All of these theories essentially provide insight into the ways employees are motivated to perform in the workplace. When the content of these and other theories are aligned, the results show that people respond to a number of different stimuli in the workplace and that simply paying someone a higher salary is not the right answer to creating an engaged and productive workforce.
It is important for employees to understand how they are paid. It is advisable to let them know that salary and wage levels are set to ensure that they are compensated fairly and in line with what other companies in your industry and area are offering.
The better that employees understand how their merit increases and bonuses are calculated, the easier it will be for you to manage any questions, concerns or complaints about pay that they bring forward. Understanding how to obtain higher pay levels is also a key to having employees interested in developing their skills and abilities to perform at a higher level and be promotable to higher-level positions.
Through communicating how the company calculates pay and bonuses in a fair and consistent manner across all levels of employees, it also works to prevent accusations of favouritism.
This section of the website outlines the various elements to be considered when putting together the compensation and benefits programs for your organization, and discusses the process of creating alignment between them, including base salary, incentive plans, benefit programs and other people-related policies and programs, such as managing performance and recruitment.