Compensation and benefits Essay Example | Topics and Well Written Essays - 750 words

Compensation and benefits - Essay Example Since every organization strives to surpass the others in business and efficient allocation of resources, many organizations take strategic measures to target the competitor’s employees with a higher pay and more benefits. This allows them to gain an upper hand over the competitors as they have a valuable resource that once contributed towards the success of their rival company. In this age of business innovation and competition, it became imperative for organizations to develop strategic compensation plans with non-tangible benefits to satisfy and retain employees. Apart from restricting their move to another organization, employees who are offered a fair and attractive compensation also tend to be more efficient at work. From the organizational point of view, employees who have been given training and have been honed to work effectively become less likely to switch. A strategic compensation package builds up the organization’s image as good employer. This image is ben eficial for any company because it attracts more qualified professionals to apply for jobs in these organizations. Traditional bases for pay involve the consideration of employees on the basis of the general cost of living, experience, qualifications, seniority and merit. These have long been determinants of the extent of pay for the service being offered. However, if the Maslow’s hierarchy of needs is considered it only satisfies the bottom two needs of the pyramid i.e. psychological, social and safety needs. With the passage of time, the compensation bases have also evolved and the modern bases of have a few more additions like variable pay according to performance, usage as a means to communicate the organization’s values and variability with the business performance. The modern system hence caters to the self-esteem and self-actualization level of the