HUMAN

RESOURCES:
COMPENSATION,
BENEFITS &
REWARD
RABIN JOY M. FERNANDEZ
Compensation
& Benefits
Compensation and benefits
refers to the
compensation/salary and other
monetary and non-monetary
benefits passed on by a firm to
its employees. Compensation
and benefits is an important
aspect of HRM as it helps to
keep the workforce motivated. It
helps give benefits to employees
based on their performance and
actions and brings the best out
the employees at workplace.
Difference
between compensation
and benefits
Both the factors are important in
motivating employees for doing their
work and paying them for the
services they are doing for the
company. However, there is a slight
difference between compensation
and benefits. Compensation is
completely related to the money
which is being paid to an employee
i.e. salary. bonuses etc. On the
other hand, benefits are the non-
monetary incentives given to
employees like health benefits for
which the employee doesn't have to
 Most employees don’t just work for the love
of their job. Most people also want a decent
salary and other incentives that will reward

Who is in charge them for their hard work.

of compensation,
These remuneration packages need to be
created, managed and distributed efficiently.
This is where HR professionals that
benefits and specialise in compensation and benefits get
involved.

rewards Without these guys nobody would get that

‘just been paid’ feeling at the end of the
schemes? month and Christmas bonuses would
certainly be a thing of the past. For many
people, compensation and benefits
professionals are the most important guys in
the HR department. Why? Well, because
they control the money of course!
 Basically, people who work in compensation and benefits

What are the are responsible for devising policies for an organization's
salary, bonus and incentive schemes. These might include:

responsibilities Salaries
Bonuses
Commission
of someone in Company cars
Pensions

compensation, Life assurance

Profit sharing
Dental plans
benefits and Medical insurance
Vouchers

rewards? Capital bonds reward schemes.

They are then in charge of administering, managing and
evaluating the payroll, salary structures, and incentive
schemes. Basically, they make sure that the right people
get the right amount of money, at the right time.
Why is a good The right compensation and
benefits schemes ensure that hard-
working employees are rewarded
compensation, fairly and in the most cost-effective
way for the company. This in turn

benefits and then motivates employees to

sustain their performance.

rewards scheme The compensation, benefits and

important?
reward schemes that these HR
professionals manage are not only
important for retaining and
motivating employees, but also for
attracting new people to the
company. Salary and incentive
packages are one of the main
 Companies hire people individual to achieve their
organizational goals and people join companies to
earn money & build their career. One of the
biggest factors why people join companies in
the compensation and benefits, salaries, perks,
incentives etc which is given to them. Apart from

Importance
the company's reputation and job profile, the
money offered as a salary is pivotal in attracting
people to work for the organization. The more the

of compensation
compensation and benefits offered to employees,
the more is their loyalty, motivation to work and
do well. However, companies which offer lesser

and benefits
salaries see a high attrition rate and less
productivity from employees. All these factors help
in making compensation and benefits an important
factor in managing workforce. Salaries of
employees are defined by several parameters like
experience, education background etc. In senior
management, skills like team management,
communication management, leadership,
Compensation and benefits
components
There can be several ways where benefits can be given to
employees. Mostly it is given in terms of a CTC or
gross salary. Some of the various components of
compensation and benefits are mentioned below:

1. Fixed pay: This is the 3. Equity Pay: Employees are

basic salary paid to the
employee irrespective of
any other factor. This is
stated clearly in the
employment contract. This
is the compensation or  appreciation of the stock price
salary or wage which an
employee or a worker will
definitely get as long as he
or she is an employee of
the company.
2. Variable Pay: This is the
additional compensation
paid to employee based on
employee’s performance,
company performance etc.
awarded shares of the
company, often at a
discounted price. Employees
are expected to make money
out of them by the
and the growth of the
company. This is mostly given
to the senior management who
have served the company for a
long time.
4. Other benefits: Benefits
such as medical facilities,
insurance policies, company
owned car of flat etc all play an
important role in motivating
What skills do HR employers in this
sector look for?
Compensation, benefits and
reward careers are all about
money. Consequently, HR
professionals who work in this
area need to be numerate,
commercially aware and have a
detailed knowledge of financial
laws and regulations.
As well as monitoring their own
company’s salary structures and
benefits, these people may be
required to research and analyse
the salary rates of their
competitors.
However, it’s not all about numbers,
paycheques and payrolls. These guys need
excellent communication skills to make
recommendations to employees on pension
and insurance schemes, and to liaise with
government departments and trade unions
with regards to compensation and benefits
issues.
Indeed, these roles have a strategic element
too, as the needs of the company and
employees need to be balanced effectively.
Furthermore, compensation and benefits are
directly linked to market changes.
Consequently, difficult decisions regarding
salary and benefits alterations may need to
9
be made within this department.
Would I be in charge of all
compensation, benefits and reward
schemes?

The size of the organisation determines

what kind of work you might be doing in
your compensation and benefits career. In
smaller organisations, some people might
deal with the whole range of
responsibilities, whereas larger companies
may offer careers which focus on one
specific aspect of the compensation and
benefits remit, such as payroll
management. 10
References:

https://www.allaboutcareers.com/careers/career-
path/human-resources-compensation-benefits-rewa
rd
https://www.mbaskool.com/business-concepts/hum
an-resources-hr-terms/4032-compensation-a-bene
fits.html

11