The Importance Of Compensation

In today’s society, there are a number of ways that compensation can be determine and there are a few salary trends that employers should be aware of in order to accurately pay employees based off his/ her qualifications and performance. Compensation has a very large impact on retaining and attracting employees and it takes a toll on the organizations profits (Mello, 2015). When an organization does not have a consistent pay scale and it not fair about how employee raises are given, it can really affect the attitudes and performance of their employers. Compensation should be a decision that is agreed upon by all top management and it should be supported with evidence, but also compensation and salary trends should be competitive for the

Many employees look at what he/ she is being paid by the hour or the salary they are being rewarded, but they forget about all the extras that are a part of their total compensation package. Benefits such as the employer paying half of the employee’s medical insurance, the employer matching the employees 401K contribution, or even Christmas bonus’ are all items that are now being considered when determining an employee’s salary or pay scale. These benefits cost the employer a lot of money every year, but since the employee does not actually see those monies, the employee forgets that those items are included in their total package. Also, now with the Affordable Care Act being implemented, it might be cheaper for an employee to get insurance through that agency instead of participating in the employer’s plan, but they still want their money from their employee to cover this cost (Dobbs, 2015). Employee fringe benefits need to be included in the employee’s total compensation package and the employees need to be aware of all the “extras” that the employer is contributing to the employee in addition to their hourly or salary