A compensation package is referred a broad combination of the numerous benefits that are offered to an employee via an employer. This package may include a series of elements including decent wages, proper insurance packages, health insurance packages, timely incentives, vacations and other additional perks. Good compensation packages are often used by the employers to attract and retain competent employees. These packages are also highly relevant for the promotion of a couple of company values. A business that does not offer a lucrative wage may still turn out to have a decent compensation package by providing economical healthcare/childcare benefits to an employee.
What are the basic components of a good compensation package?
One of the basic components of all compensation packages is a good and consistent salary. It can also include a guarantee for regular increases in the salary, based on the living cost, job performance and quality of time with the concerned company. Besides this, employees should also receive incentives and bonuses as a part of a good compensation package.
Time-offs or vacations is another remarkable benefit, which most of the employees are entitled to. In this regard, the company should separate the sick-leave, and the vacation leave in order to the compensation package even more flexible.
What are the components of an ideal compensation package?
Well, besides the couple of basic components there are also some other additional components that make an ‘ideal’ compensation package. Some of them are listed below.
Health and medical benefits
Insurance for life and accident
Travel and legal insurance
Bonuses for non-normal accomplishments
Additional perks like free food, good internet services, gym facilities, cell phone services, company discounts, travel discounts, etc. should be provided by the company
In some cases, the employers are legally regulated to pay a certain amount of wage to the employees. Again, in some countries, the employees are entitled to receive maternity and travel leaves. However, the time of these leaves can be determined by the company.
Why should an employer design a good compensation package?
From the perspective of an employer, designing a proper and decent compensation package plays a vital role in attracting a large number employees and keeping them in service for a considerable period of time. Even though high wages is a part of a good employment package, employees also expect bonuses and incentives which act as a potential for earning more money in the long run. The employers have to understand what the employees expect from them. Once the organization lives up to the expectations of the employees, the employees’ morale and performance will buck up to a commendable extent.
Many companies try to make their values and goals even more clear with the benefits they offer. Apart from the basic benefits, additional benefits like child care, travel leave and medical insurance indicates that the employers are ‘actually’ concerned about their employees. This in turn, attracts more workers which further results in a more cohesive organization.