Benefits and Compensation

1. Introduction

Whenever somebody is working in any organisation, he/she is liable to pay. Because the individual participated and contributed in one way or the other to the organisation’s goals, he is rewarded in several ways.

Wages remain the most important responsibility owed by an employer to an employee. 60 percent of the total cost of running any business is made up of wages, salaries and other associated costs. This is known as total rewards. (Robert et al, 2008 p. 360) defines total rewards as “monetary and non-monetary rewards provided to employees in order to attract, motivate and retain them”

Compensation and benefits constitute the total rewards package that an employee gets for working in an organisation. Compensation is viewed or regarded as direct pay, since it is the amount of money the employee receives. Benefits are indirect pay, since they are monetary equivalents that can be converted later into cash or used to pay for selected expenses.

Benefit is a “generic word used to describe the components of a substantial element of the total remuneration provided by employing organisations to their work-forces” (White et al 2000, p. 164).

(Armstrong, 2004) cited that there are four reasons why organisations pursue benefits policies and practices:

• To increase the commitment of employees to the organization;

• To cater for the actual or perceived personal needs of employees, including those concerning security, financial assistance and the provision of assets in addition to pay, such as company cars and petrol;

• To prove that the organisation takes care of employee needs;

• To ensure that an attractive and competitive total remuneration package is provided which both attracts and retains high-quality staff;

(Deeprose 2006) also advanced three reasons why organisations recognise and reward employees :

- It helps ORGANISATIONS GROW THEIR REVENUE AND PROFITS

- RETAIN THEIR BEST EMPLOYEES AND...