Strategy for compensation

Maintaining stable relationships in organizations is a prerequisite for growth. As a result, it is important to attach excellent incentives to all workers through viable pay schemes. Indeed, compensation is the amount of monetary and non-monetary contributions made to workers by their employers for well-performed activities (Bryant and Allen, 2013). Compensation schemes are more than mere wages. The Detailed Pay Scheme covers commissions and incentives.
Employment legislation that impacts the Compensation Plan
A number of work policies have an effect on the pay package. These federal and state regulations concern employees’ salaries as well as the working climate. First, the Federal Employees’ Compensation Act (FECA) outlines a comprehensive compensation guideline for all federal employees who succumb to injuries or disabilities. This law provides benefits in the form of wage loss compensations to employees with either total or partial disabilities. As a result, FECA ensures that organizations adhere to compensation programs and provide hazard-free working environments.

Secondly, the Employment Retirement Income Security Act (1974) is an employment law that manages retirement plans, health insurance coverage, and pension benefits. It guarantees benefit incorporation into compensation programs for all employees. As a result, employees work in conducive environments that offer motivation. Besides, the law advocates for employee retention in organizations. Finally, the Black Lung Benefits Act is an employment law that provides both medical benefits and cash payments compensations to persons working in coal mines. In addition, the law advocates for the provision of two types of medical services including diagnostic testing and medical coverage for claimants diagnosed with black lung disease. Indeed, this employment law improves employee health safety and protects organizations from high employee turn-over (Bryant and Allen, 2013).

Role of Benefits in an Organization

Providing benefits to employees is an activity that no organization should ignore. Indeed, benefits play essential roles in organizations. Employers who continually offer traditional programs to their workers are disadvantaged in hiring competent and dynamic employees in their organizations (Tripathi and Agrawal, 2014). Over decades, global markets are becoming more competitive. Consequently, adopting employee retention strategies and conducive workplace environments have been central themes. Undoubtedly, benefits have played crucial roles in improving work environments for both the employers and their employees. First, employers flexibly manage high-risk coverage at considerably affordable costs. Secondly, benefits enhance organizational productivity since employers reduce financial burdens imposed on their institutions. Thirdly, benefits result in high savings in institutions. Notably, premiums are categorized as tax deductible as is the case with corporation expenditures.

On the other hand, benefits result in various advantages to employees. First, employees with disabilities are in prime positions to enjoy disability insurance covers as well as additional protection. The latter aids in the provision of income replacement programs in the event of health complication or disability. Secondly, workers have peace of mind due to security covers provided to them and their families. There is a general feeling of pride and satisfaction among organizations that offer benefits to their employees. As a result, there is increased productivity in such institutions.

Principle Benefits Mandated by Law

Federal and state laws outline various benefits that organizations must provide to their employees. Social Security is a principle required benefit that covers old age, hospital, and disability insurance. In this case, employers and employees share social security costs through payroll taxes. The Social Security Act (1935) provides monthly benefits to retired employees aged 62 and above, the disabled, eligible dependents, and spouses. The Unemployment Insurance is another significant benefit federally mandated by law. It aims at reducing unemployment hardships through payments. Besides, this form of benefit helps unemployed people to flexibly find new jobs as well as acquire incentives for employment stability. Finally, the Workers’ Compensation Insurance provides financial protection to individuals who are either hurt or become sick while still in their workstations. Besides, the law requires that a no-fault insurance system be created and payments to be made by employers. This insurance system instigates the adoption of a medical expense compensation plan. Payments made entail all the lost wages from the time the employees were laid off until their return to job (Tripathi and Agrawal, 2014). Many organizations have efficiently minimized expenses through establishment of conducive and hazard-free working environments.

Benefits not Mandated by Law

Apart from the principle required benefits, there are other benefits that organizations may provide to their employees. Such benefits which are not required by law include Pension Plans and Health Insurance benefits. A Pension plan is a form of retirement income. Employees become eligible to acquire these benefits once they attain 21 years and have been in service for a minimum period of one year. Upon compliance with these requirements, workers’ earnings cannot be revoked. The employees become vested and comfortably receive their pension benefits. Pensions impacts organizations both directly and indirectly. Directly, pension benefits affect an organization’s financial statements such as balance sheet. Besides, pensions indirectly impact organizations by dictating employee performance and the timing at which workers retire. On the other hand, Health Insurance benefits cuts down health care costs for organizations. Employers are required to contract with health care facilities to provide medical services to their workers. In this case, an agreed upon fee is scheduled. In contrast to health insurance benefits, basic medical plans only cover surgery, practitioner care, and hospitalization. Health insurance benefits positively impact organizations in several ways. First, there is higher employee retention. Employers offer competitive compensation packages in the form of health insurance coverage to attract high-quality workforce. Secondly, health insurance benefits enhance organizational productivity. Access to affordable medical care increases job satisfaction among workers, consequently improving organization’s profitability (Bryant and Allen, 2013).


Bryant, P. C., & Allen, D. G. (2013). Compensation, benefits and employee turnover: HR strategies for retaining top talent. Compensation & Benefits Review, 45(3), 171-175.

Tripathi, K., & Agrawal, M. (2014). Competency Based Management In Organizational. Global Journal of Finance and Management, 6(4), 349-356.

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