Video Transcript: Managing Employee Compensation Benefits

Hello, welcome. We're going to be discussing managing employee  compensation and benefits. Compensation is the method and practice of  maintaining balance between interest and operating the company within the  fiscal budget and attracting, developing, retaining and rewarding high quality  staff through wages and salaries which are competitive with the prevailing rates  for similar employment in the competitive market, it is the cornerstone of an  effective talent management strategy. So as we were talking about before, you  want to make sure that you retain top talent, you need to make sure that you are providing competitive rates for the employment in the marketplace. So that's one way to really give incentive for top talent to stick around with the organization.  So natures of compensation, basic pay, variable pay benefits, so our basic pay  is typically going to be just our base salary, right. So then we have variable pay,  right, which could be a bonus structure, right? You know, you pay for your  performance that goes above and beyond, right? And then we have benefits,  right, health care benefits, disability benefits, right? Those types of pay are the  nature of our compensation system, objectives of compensation planning,  internal equity, external equity, individual equity, attracting talent, retaining talent, cost control, compliance with legal rules, ease of operation, right? So eternal  internal equity, right? We want our employees to feel like that. They are gaining  some equity inside of our organization by being appreciated, by being  recognized, and also by being compensated. External equity, you know, we  need to make sure this also goes with the recognition the employee of the  month, those type of things, that's compensation. It makes them feel like they  have equity in the company, that they are being recognized for their talent,  individual equity, you know, telling them good job. You know, one on one  appreciation showing them that you do appreciate attracting talent. Now we  want to put ourselves in a position to where we want to be sought after by top  talented people. So if we're sought after by top talented people, we'll have an  easier opportunity to get them ingrained into our culture and then have a better  opportunity of retaining them at long term. But we also need to learn how to  control our costs, right, so we can't just be overcompensating everybody, right?  We need to make sure that our costs are controlled. The compensation is strong but fair, compliance with legal rules, right? We need to make sure compensation is all done, legal, especially with any kind of variable benefits or pay, such as  bonuses. Ease of operations, as we retain top talent, the ease of our operations  will continue to increase, because we have top talent that know what to do, that  have the skill set that can drive it forward. And as an upper manager, upper level manager, you will have an easier time with your job, being able to manage  whatever it is that you need to manage, because you know that you have high  quality, talented, skilled professionals working underneath you that are  dedicated to doing a good job systems to achieve the objectives job evaluation.  As an employer, my employee needs to know what it is they are to do, how to do

it, when to do it, and then, after they provided those functions, we need to find a  way to evaluate their work. And you can do this if they if they provide solid,  strong work, you can provide wage increases. Salary ranges can go up, but if  they're doing a poor job, no increases for them, no bonuses for them, wage and  salary adjustments according to performance. So fringe benefit, the term fringe  benefits refers to various extra benefits provided to employees in addition to the  compensation paid in the form of a wage or salary, the objectives of fringe  benefits are to create and improve sound industrial relations, to boost up  employee morale, to provide qualitative work environment and a strong work  life, to provide security to the employees against social risks like old age  benefits and maternity benefits, to protect the health of employees and to  provide safety to the employees against accidents, to promote employees  welfare by providing welfare measures like recreation facilities, to create a  sense of belongingness among employees and to retain them. Hence fringe are  called golden handcuffs. This gives them kind of icing on the cake, so to speak,  right, these things that that they get from their company that they necessarily  didn't have to have, but the company allows them to have these benefits  because it helps them and their organizational experience and ingraining  themselves into the culture, type of fringe benefits for employee security, your  employees need to know that they're secure so they can do a good job and not  have any worries. For health protection, you know they need health care. They  should have some kind of subsidy or skin in the game from their organization  that allows them to have health protection for old age and retirement. If I've  invested my life and my career into this organization, you know that's why you  have a lot of matching 401ks by organizations. They do that because they want  to show their appreciation to their employees and help benefit them as they age.