A worker’s compensation is any monetary and non-monetary benefit that a person receives in exchange for the work they do, when they are employed within a company.
In other words, it can be said that labor compensation can be both financial and in-kind remuneration that a person receives when working for a company. Since, it is a recognition that employees receive for all the work they carry out within the organization.
For this reason, labor compensation can be an element that helps the company in principle to attract the human resources it needs and then to be able to keep it. On the other hand, workers’ compensation allows workers to satisfy their material and social needs.
Without a doubt, every company should have a defined worker’s compensation policy. This policy is administered and managed through the human resources department. A good labor compensation policy helps attract the best human talent. Likewise, to retain the best employees and improve their productivity. This, because employees feel happy, motivated and committed to the organization.
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Types of workers compensation
To begin, we must be clear that compensation is not reduced solely to the monetary payment of an attractive salary. If not, there are other types of benefits that can be offered to employees that give them satisfaction. Among the main types of compensation we find:
1. Monetary compensation
First, we find the economic compensation. In this type of compensation, the effort of the employee is recognized by paying a competitive salary. The salary is a payment that represents a fixed income for the employee. However, the company may offer additional variable income payments, such as:
- Extra hours.
- Performance and productivity bonuses.
- Commissions for achievement of objectives.
- Sales quota commissions.
- Extraordinary payments.
2. Compensation of benefits in kind
Secondly, we can mention payments in kind. A payment in kind is to provide the employee with goods and services that allow him to cover certain types of needs. Among the most used payments in kind, we find:
- Provide vehicle to the worker.
- Offer a private pension plan.
- Medical, accident and life insurance.
- Payment of educational and updating services.
- Possibility of acquiring shares of the company.
- Discounts of the products and services that the company sells.
- Coupons and tickets for certain products.
3. Compensation of benefits for strategic purposes
Third, there are the strategic trade-offs. These compensations allow obtaining benefits related to the job position that a person occupies. Obtaining advantages such as:
- A flexible schedule.
- To be able to carry out their work through teleworking.
- Days off associated with intensive days.
Goals of a Worker’s Compensation Plan
Among the main objectives that companies hope to achieve with their compensation plans are:
- Attraction and acquisition of the best human talent: Clearly, a company seeks to incorporate the best qualified human resources that offer their labor services in the market. But to do that, you need to provide the best and most attractive workers’ compensation propositions within the competitive environment.
- Avoid staff turnover and retain current employees: Likewise, if the company wants to retain human talent and avoid staff turnover, it must offer the best compensation.
- Improve company performance: Entrepreneurs know that to achieve the best level of company performance requires the active commitment of employees. Therefore, a good compensation plan ensures that employees work motivated and committed. Making the goals of the organization are met.
In conclusion, it can be said that it is necessary for a company to have an adequate compensation policy to attract and retain the best workers. This is the only way employees work motivated and committed to the organization. Since, they are sure that their efforts are well rewarded by the company where they work.