What are compensation methods?

Question

What are benefits programs? Why is benchmarking important in maintaining external equity in compensation? What is the relationship between compensation and employee morale?

Answer 1

1. Benefits are compensation that is not paid as a direct salary For example it can include health care, time off, free meals, and company cars

2. Benchmarking is important to insure you are paying your employees at a similar level to your competitors. If not your competitors will likely recruit better candidates and may steal some of your best.

3. In general the higher the compensation, the higher the morale. The lower the compensation, the lower the morale. However, there are lots of studies that have shown the intuitive belief of compensation being the most important factor leading to morale is wrong. Most theorists believe the quality of supervision is more important than compensation, and often it is not the amount of compensation that drives morale but rather the proportion of compensation to perceived effort of work.