Running a company is no easy feat in today’s highly competitive business landscape. Amid the current economic and social challenges, business owners must always be on their toes to stay afloat. It’s crucial to hire and retain quality employees to ensure successful operations.
One of the best ways to build your dream team is to provide compensation and benefits that will motivate your employees. A study reveals that attractive benefits and salaries are the main drivers of employee satisfaction. If so, it would help if you kept up with the evolving laws on compensation.
Aside from the benefits required by law, it’s also best to offer benefits that can boost morale and productivity. Some benefits you can provide are health insurance, tuition reimbursement, long-term disability coverage, and vacation allowance.
What are compensations and benefits?
Compensation and benefits generally refer to an employer’s remuneration to an employee. They may seem to be interchangeable terms. However, some elements differentiate one from the other.
What is compensation?
Compensation is the payment given to employees by their employer. It’s a reward for their services as part of their job. Workers receive a salary, bonuses, and other perks such as free meals or healthcare when working for a company. Financial and non-financial elements can become part of the compensation package.
What are benefits?
Benefits pertain to non-monetary perks offered to employees to appreciate them for doing their job. Typical benefits include remote work opportunities, flexible schedules, free meals, and gym memberships. Although benefits are not financial rewards, they can contribute to a worker’s overall job satisfaction.
Why are compensation and benefits essential to an organization?
Aside from knowing the basic facts about hiring in the U.S., you must also know what compensation to provide your potential hires. Salaries, bonuses, wages, and commissions fall under compensation. It’s best not to undermine the value of offering additional benefits even if labour laws do not require them. These perks can make a job offer more appealing to applicants.
The proper compensation and benefits package can help your company in several ways.
1. Attracting high-calibre talent
Talented and skilful people know the value they bring to a company. They would often look for career opportunities that pay handsomely. Aim to hire these high-calibre talents, so you can save on recruiting costs and focus on other business tasks. The best way to entice potential rockstars to join your team is to offer a compensation package at par with your competitors.
2. Fostering company loyalty
There is a big chance that employees will stay loyal to your company if they’re happy and paid well. When team members receive the proper compensation and significant perks, they will likely stay with you for the long haul. Having loyal employees means you don’t need to spend money on recruitment expenses. Low turnover rates and employee retention also cultivate a productive and positive work environment.
3. Boosting staff motivation
Providing the proper compensation and benefits to your employees shows that you value their contribution to the company. When your staff feels appreciated, they’d gladly report for work and do excellent jobs. Furthermore, commissions and bonuses can be great incentives for exceptional performance. Strategizing around this compensation structure can ultimately boost sales and income.
4. Enhancing job satisfaction
Paying your employees well and offering relevant benefits can increase job satisfaction. When you give them the means to improve their financial and personal well-being, they’re likely to feel more fulfilled in their jobs. Benefits such as stock options, holiday bonuses, and career development opportunities can inspire them to contribute to the company’s success.
5. Boosting productivity and profitability
Fulfilled and happy workers are more productive. They’d gladly give their best when you value their role in the company. Reasonable salary rates and perks boost productivity, which can lead to profitability.
What are the compensation and benefits employers might have to provide?
The search for the best employees is becoming more competitive. Applicants are no longer solely after the money. They also want other opportunities that can support their physical and mental health.
One way to entice qualified candidates to sign with your company is to craft an attractive compensation and benefits package. There are two general classifications of compensation. The first one is legally mandatory. The other category includes benefits that are industry standards or employers give voluntarily.
What are the compensations and benefits mandated by law?
1. Medicare and social security
Employers and employees contribute to these statutory benefits through payroll deductions. Workers may not reap the rewards immediately, but they can access them in the future. Social security provides employees income upon retirement or permanent disablement. Medicare ensures that workers 65 years old and up or those with disabilities and medical conditions have health insurance coverage.
2. Unemployment insurance
Both employers and employees share the contribution for unemployment compensation insurance. The government administers this benefit on the federal and state levels. It allows employees who have involuntarily lost their jobs to receive partial income for a short period.
3. Workers’ compensation insurance
Employers also have legal obligations to offer workers’ compensation insurance. It helps injured or sick employees who suffered from accidents or illnesses in performing their employment duties. The insurance covers rehabilitation and medical treatment expenses. It also provides replacement income or paid leaves to help employees get back on their feet.
4. Family and medical leave
The FMLA or Family Medical Leave Act requires private companies employing 50 employees or more to provide paid leaves for up to 12 weeks. It would help if you gave it without compromising the workers’ job security. According to law, employees must receive this benefit every year. It ensures they can attend to their family, personal, and medical needs without worrying about losing their jobs.
5. Health insurance
Based on the Affordable Care Act (ACA), businesses that have more than 50 full-time employees must grant healthcare coverage. The law also requires them to disclose the health insurance value on W2 forms and file them at the IRS. Companies in this category must also report the type and cost of insurance plans offered to their staff. The federal government may penalize employers who won’t provide full-timers affordable and sufficient health insurance.
6. Minimum wage
According to the Fair Labor Standards Act (FLSA), the federal minimum wage is $7.25 per hour. Although some states have minimum wage standards, the law dictates that employers must provide whichever amount is higher. For example, Maine, Minnesota, Ohio, and Washington have helped employees keep up with living costs by raising the minimum wage.
7. Overtime pay
Laws on overtime pay are different for every state. The FLSA requires employers to abide by their regulations. Like the minimum wage requirements, the higher pay rate will override the lower one.
What benefits are not required by law?
Some companies grant their employees other benefits not prescribed by law, offering additional perks that can help boost their worker’s physical, social, and mental health. You may want to give your employees the following benefits.
1. Paid holidays
No law mandates employers to offer paid leave during holidays. However, most companies ensure their staff won’t report for work during holidays. Employees must receive overtime pay if they need to work on a holiday.
2. Dental care package
Some organizations offer dental insurance to cover treatment, care, and other procedures. You may provide full coverage or pay for a portion of the dental care cost. Many employees appreciate this benefit since dental procedures can be expensive.
3. College debt assistance
College debt has been a long-standing problem in the U.S. No current legislation requires companies to offer college debt repayment assistance. However, some employers help their employees pay for their college loans. It’s a great perk, especially for talented workers with excellent career potential.
How do compensation and benefits ensure business success?
A compensation and benefits package includes many elements and considerations. It’s important to note that it must consist of those mandated by law. Noncompliance can lead to assessment from the government and stiff penalties. It can be challenging to craft a compensation package that will benefit both the employer and the employees. However, it’s a crucial part of business success.
First of all, it entices top talent to join your company. As they continue to reap the rewards of company benefits, they’re more likely to stay and give their best to the organization. Secondly, it clarifies how much your benefits account for the company’s expenses. It can motivate you as the leader to continue generating revenue so you can continue to support everyone on your team.
Foster a Positive Work Environment Through the Best Compensation Package
Managing your own business entails so much responsibility. Aside from ensuring optimal operations, you must influence your employees to be happy and productive. You can achieve this by providing your employees with an attractive compensation and benefits package. When your staff feels you genuinely care for their well-being, they’ll likely give their best.
On the other hand, other benefits may not be a requirement under the law but are still beneficial to your employees. These perks can significantly improve their well-being, making them exceptional team members.
Also, read:Â 7 Fascinating Ways to Promote Financial Wellness at Work
