What Is the Importance of Compensation and Benefits?
Compensation and benefits are two of the best tools for companies to recruit and retain quality employees. Enticing benefits and compensation also help existing employees stay motivated to excel each day at work.
Competitive compensation packages ensure a company attracts the top talent available in the industry. When deciding between potential job offers, employees often look to the compensation package first. Benefits help ensure a prospective candidate sticks with a company. As single employees marry and start families, benefits such as health and life insurance become essential parts of living. Companies that provide these services for free or a reduced cost as benefits entice employees to stay.
Many companies tie compensation directly to employee job performance through incentive packages, such as bonuses and profit-sharing plans. This helps employees align their professional goals with those of the company while rewarding top performers and providing incentives for them to stay.
Competitive benefits and compensation packages often pay for themselves with the amount of money the company saves on headhunting and training costs of acquiring new employees. Compensation also ensures companies are compliant with federal labor laws such as the Fair Labor Standards Act or the Equal Pay Act. A company with competitive compensation and benefit packages is far more likely to recruit and retain great employees and position itself ahead of the curve in its industry.