What is the importance of compensation and benefits for a company?

The compensation and benefits of a company are part of the strategies and procedures of Human Resources, this is because it is the area that is in charge of studying the techniques and principles to achieve the adequate and total compensation that a worker should receive.

The compensation that is also called salary, salary or benefits, is the reward that a worker receives for his work, or a workplace injury management. It is the element that allows the organization to attract the employee by satisfying his needs.

At present, this system has incorporated a series of incentives, in order to stimulate the workers of a company and establish a relationship between labor costs and productivity.

This function was originated to improve the results in the company and in this way the productivity of the organization is not affected, work quality is not deteriorated, good performance is affected, complaints, absenteeism and desertion increase.

The company must bear in mind that lack of satisfaction leads to lack of confidence and feelings of anxiety on the part of employees, which would be a loss of profitability for the company. That is why an economic balance point must be sought that rewards and benefits the work performed by each of the employees.

Types of compensation of a company

This system for workers could be a determining factor with the ability to retain their potentials and incentives when they put into practice all their performance and thus achieve organizational goals. In that case, the offsets can be classified as follows:

• Monetary: These are extra remunerations that are received outside of salary.
• Bonds: They are attractive incentives for employees, such as bonuses for permanence or productivity.
• Non-economic benefits: Here you can find social security, business discounts and retirement plans among others.
• Training: It is one of the fundamental aspects for employees, since it is the study opportunities that the company facilitates. This will allow workers to increase their knowledge in the areas of interest and encourage them to become professionals that the company values and qualifies.
• Recreational: This type of compensation is directly related to the quality of life and recreation that each employee of the company needs.

Importance of offsets

Companies design compensation systems, which are very important to retain, attract and compensate all workers, this in order to provide security to the company so that it has the best talents and in turn workers obtain remuneration according to their performance and contribution.

For this compensation system to remain robust, it must have:

• A compensatory philosophy that contains a higher remuneration than the minimum wage.
• A performance evaluation system, where the contribution of each worker and their respective remuneration are related.
• A system where the performance of all the positions of the company is determined.
• Make known in an easy and simple way to employees, the indicators of the vision, mission and objectives of the company with which they can relate.
• Establish clear principles of company values and policies and what is expected of each employee in the performance of their work.

Role of compensation and benefits

The function of this system has developed a leading role in most companies, becoming one of the most important areas within the Human Resources department.

For there to be an approach to the organizational model based on internal balance and external competitiveness, some aspects can be found that are directly related to compensation, where various methodologies and tools will be taken into account that will make it easier for employees to face the remuneration by the company.

This approach recognizes the deep needs that exist today in companies, to be able to improve the remuneration of the participants.

Elements of compensation

It is necessary that the concerns of each of the employees be thoroughly known, know what their needs are in the face of the position they hold and especially establish adequate communication, where they feel included to participate in the contributions and improvements of the proper functioning of the company. In this case, the following elements must be added:

• Facilitate a program that contains fractional benefits.
• Be clear about the performance indicators that are individual, group and organizational.
• Create a competitive and equitable salary structure.
• Provide some incentives in relation to sales.

Advantages and benefits of compensation

Having a compensation plan within the company generates a series of advantages for both the employee and the institution, among them we can mention:

• Increased job satisfaction and motivation for the employee.
• It improves the good professional performance of the work team.
• Increases staff development and individual well-being.
• Decrease employee turnover.
• Ensures good social relations between employees.
• Attracts the retention of human talent.
• Develop the feeling of job security.
• It helps stimulates worker’s incentive to achieve the established goals.
• It helps improve the employee’s loyalty and relationship with the company.