Compensation And Benefits Analysis
Compensation & Benefits Analysis
Compensation and benefits are the most visible rewards provided to employees in return for their services and usually a large percentage of operating budgets. Providing fair and competitive compensation and benefits has a direct impact on your organization’s ability to recruit and retain valuable employees. There is no such thing as a perfect package, however there are some elements that must be considered when developing the structure that is right for your organization.
- Alignment with strategic plan and goals
- Compliance with laws and regulations
- Applicability, importance or value to employees
Compensation Market Study
Organizations regularly analyze their own compensation ranges and structures in comparison with industry trends and economic conditions. Paying people fairly is good for business. Underpay, and employees will eventually look for a better offer. Overpay, and the payroll budget and profitability will suffer. Using market data is a sound approach to research the value of jobs. Annual reviews are recommended to understand trends in base pay, variable pay, differential pay, and incentive pay and play a key role in decisions to make individual or organizational salary adjustments.
- review current compensation policies and procedures for regulatory compliance and effectiveness, budgetary guidelines and approval processes.
- define benchmark positions based on roles, responsibility levels, industry and region.
- perform market analysis to determine prevailing rates and best practices suing various tools including salary surveys, industry associations, and governmental data bases.
- recommend options for implementing salary adjustments, variable pay, differential pay, and incentive pay.
Comprehensive compensation and salary grade systems are used to document the basis for compensation decisions that enhance recruiting and retention of valued employees while containing costs. Determining pay grades structure relies of objective grouping of jobs that are similar for pay purposes and of similar value to the organization. Pay ranges establish minimum and maximum pay rates for the pay grade.
- analyze current compensation structures based on best practices and market study results.
- define pay levels that are competitive and reflect career paths based on qualifications, responsibility levels, industry standards.
- provide recommendations on salary and grade structures, pay types and pay systems.
- provide recommendations regarding incentive and reward plans.
- Develop a communication plan that will ensure all stakeholders understand how to use the compensation structure as a decision-making or career-planning tool.
Benefits Plan Design – Benefits plans are defined as indirect compensation. Benefits generally come in various forms of protection for the employee and/or their family such as health, dental, vision, life, and disability insurances as well as retirement plans. Benefits also include reward systems for promoting loyalty, continued employment and healthy lifestyles.
- review current benefits policies, procedures and plans for regulatory compliance and effectiveness.
- assess benefits package for affordability, applicability, importance and value to employees; analyze the need for updates and determine priorities.
- review benefits plan administration and providers.
- provide recommendations on benefits package design.
- provide recommendations for communicating value of compensation and benefits to employees.