Question

Discuss the importance of benefits as a part of employee compensation.

Answer 1

Employee benefits are also known as perks or fringe benefits. These are provided to employees over and above salaries and wages. These employee benefit packages may include overtime payment, medical insurance, vacation, profit sharing and retirement benefits.Offering benefits to employees is important because it helps to attract and retain talent. Thus, the retained talent differentiate business organization from its competitors in the market.Various point of importance of benefits as a part of employee compensation are discussed below:

Importance of Employee Benefits

1. Attracting Top Talent: People always want to put themselves in the best possible position financially. Those who are worth a specific salary amount often know their value and will seek a position that pays accordingly. As such employees have talent and they become an asset of the organization. By providing benefits according to an employee's value in the organization, a corporate can have an edge over its competitiors.

2. Increased Motivation

Properly compensation to employees shows that an organization value its workers as human beings. When people feel valued, they feel better about coming to work. Overall company morale increases and people are motivated to come to work and do a good job. Additionally, when employees come to know that there are bonuses or commissions, they gets highly motivated to deliver grander results. Bonus and commission compensation plans become a focal point for success of the corporation.

3. Employee Loyalty

When employees are paid well.They feel happy. They show a sense of belongingness with the company. So they within the company. Proper compensation is one factor that creates loyalty. Loyalty means that business owners don't need to continue to spend time, money and energy on recruiting new candidates. Employee retention and low-turnover rates save both time and cost of the concern.

4. Increased Productivity

Happy employees are productive employees. Productivity in relation to compensation starts with employees feeling valued which increases motivation and loyalty. Not only the employees feel motivated to do a good job, but longer they stay with the company, the more they know and the more efficient they become. All of this leads to increased productivity.

5. Job Satisfaction

Creation of the right compensation plan leads to stronger job satisfaction. The right compensation plan includes benefits, along with all the other bonuses available. Employees often boast about holiday bonuses or they keenly watch how the company stock performs because they have stock options. The right compensation program invests employees into the work being done, which gives them a stronger sense of satisfaction when the company succeeds. They know they will be rewarded for their efforts; everyone likes to be appreciated.

Conclusion

Thus, in every organization it is essential to understand the importance of benefits as a part of compensation so that new employees are attracted, old are retained to ensure efficiency and effectiveness of business operations.