Human Capital Management Using Benefits and Compensation Essay

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According to statistics, it has been noted that the current workforce is growing more and more disloyal and dissatisfied. The companies that do not respond to the current trends will end up paying a high price later. This is because, with the improvement in the job market, these companies will end up losing key employees to their competitors, which leads to reduced employee productivity. Companies need to establish a well-designed employee compensation and benefits package in order to retain its top talent and attract others. There are numerous companies that desire to attract, retain, and motivate their employees in order to meet the company's strategic objectives. Currently, employees are considered to be part of the company's assets because they have to be effectively and efficiently managed. There are numerous instruments that companies can use to attract, retain, and motivate employees. Compensation and benefits are some of the tools that companies can use. It is vital that an employer identifies and offers the right pay and benefits to retain top talent within the company. Having a compensation strategy is a vital piece of the company's HR Strategy for keeping the company successful and competitive. The compensation strategy would also assist the company to keep the personnel budget under control and manage jobs by offering the right salary.



Nazir (2010) posits compensation is defined as a systematic approach to providing monetary value to the employees in exchange for the work they have performed. Compensation includes direct financial compensation, indirect financial compensation, and non-financial compensation. Direct financial compensation includes the pay an employee receives in the form of wages, salaries, commissions, and bonuses provided at consistent and regular intervals. Indirect financial compensation includes all the financial rewards that are not included in the direct compensation, and they form the social contract between employee and employer like leaves, benefits, retirement plans, employee services, and education. Non-financial compensation includes career development, and opportunities for advancement, recognition, and work environment conditions. Nowadays, employees are not willing to work for a salary or cash only they expect to receive some extras. This extra is what is referred to as employee benefits, or fringe benefits. Anything that is non-financial is considered to be employee benefits that are offered in order to enrich the lives of the employees. Employee benefits are not based on an employee's performance, and they might not have a direct effect on the performance of employees. However, having inadequate benefits could result in low satisfaction levels and increase employee turnover.



Benefits and compensation are important in Human Capital Management in the following ways:



Job Satisfaction



It is no lie that employees like to feel appreciated, and one of the ways to make them feel appreciated is offering them a competitive benefits and compensation package. Employees who are content with their job, like their job or the nature of their job is vital in increasing the employees' productivity within the company. Job satisfaction means that an employee is happy with their current job and they have a positive emotional state in regards to their job and work. Having such a positive state could be a result of many factors, but the most underlying factor is compensation and benefits offered to the employee. A company that wants and demands the best from its employees should be prepared to ensure that employees stay happy and positive all the time. Rewarding employees well by offering them competitive salaries and additional benefits would ensure that employees stay positive and handle their work in the best way possible. Job satisfaction is also guaranteed by eliminating employee stresses. Stressed out employee are most likely to abscond duty and be less productive in the performance of their daily responsibilities. Human Capital Management is charged with ensuring that employees perform at their optimal levels at all time when they are at work. Ensuring there is job satisfaction is vital if an employer wants their employees to perform at their optimal levels. It has been noted that employees who indicate they have high job satisfaction are more inclined to achieve higher productivity within the company.

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Having a competitive pay package for your employees will make them feel values, and they are least likely to waste their time looking for work elsewhere. A majority of employees that are not satisfied with their job tend to spend most of their time at work looking for other jobs and sending applications. This does affect their productivity since they have little time to actually perform their duties. There might be other factors that contribute towards job satisfaction, but compensation is what most employees consider and value the most.



Boost Employee Loyalty



According to Scorza (2011) employees who are happy and satisfied with their compensation and benefits are considered to be the most loyal to a company. Salary and health benefits are important drivers of loyalty, but there are other benefits that employees consider like retirement benefits, disability insurance, life, and dental insurance. However, only about 37% of companies recognize and offer these benefits to employees. Employee loyalty is all about reciprocity. Employees want to have a feeling that they company wants the best for them, and in return, the employees will continue to perform their work and not look for other jobs. If an employee sees that a company is doing the best it can, it creates a feeling of reciprocal obligation. A company is highly dependent on the employees' loyalty because without their loyalty the company cannot succeed. For the success of a company, there is need to have the employees support its vision and mission and work hard to achieve the company's objectives. Offering the employees competitive salaries and benefits allows them to feel appreciated, which in turn transforms to the employees working hard for the company's success. There is also the possibility that the employees would speak well of the company to their friends and this spreads goodwill for the company. During the economic downturn, most employees would leave their current employer in favor of another employer. However, if the company has developed loyalty amongst its employees the possibility of them deserting the company during an economic crisis is minimized. This is because the employees understand the company always has their best interests at heart and the current economic situation is only temporary. Having such loyalty would ensure that the company is able to ride the wave and recover. Disgruntled employees are like a virus, and they can have a negative impact on other employees. It is beneficial to ensure that all employees are on the same page and are all committed towards the company's overall strategy.



Low Turnover



According to research, it has been pointed out that employee turnover is amongst the highest costs that a company can incur in its Human Resources department. Therefore, in order to eliminate this cost, it is vital that the company works towards retaining its talent. However, it is not possible to eliminate this cost completely since there are employees who would still feel the need to leave no matter what is offered in terms of compensation or benefits. In such cases, it is best for the company to understand that employees leave a company for diverse reasons and the employer only needs to ensure that they are not leaving because they are not satisfied or are frustrated by their jobs. Retaining workers within a company creates a favorable working environment because employee relationships are not disrupted, and most of the employees understand each other. These relationships are vital in that they ensure there is a cohesive working environment and there is no need to keep learning the habits of a new employee. Interacting with new employees and training them on the processes within the company is time-consuming and takes a toll on the other employees. An employee who is not satisfied with their current pay and working hours are most likely to leave the company for another (Bryant & Allen, 2013). Employees prefer to be well compensated for the hours they work, and….....

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References

Bryant, P. C., & Allen, D. G. (2013). Compensation, benefits and employee turnover: HR strategies for retaining top talent. Compensation & Benefits Review, 45(3), 171-175.

Nazir, N. (2010). Compensation and Benefits: Definition and Importance. from https://www.hr.com/en/app/blog/2010/02/compensation-and-benefits-definition-and-importanc_g5kiosxm.html

Scorza, J. (2011). Benefits Can Boost Employee Loyalty. from https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/benefits_loyalty.aspx

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