How Benefits can be Used for Competitive Advantage
Almost all employers are legally required to provide certain benefits for employees. These include Medicare, Social Security, Workers’ Compensation, and Federal and State unemployment insurance. Companies with 50 or more employees must also provide workers with unpaid family and medical leave benefit under the Family and Medical Leave Act (FMLA).
Employers are not required to provide health insurance coverage to employees (PrimePay, 2013). Health insurance is typically a matter of agreement between an employer and employees. Medicare and Social Security are funded through taxation of the employee and the employer. Worker’s compensation and unemployment insurance are funded by employers (“Health benefits, retirement,” 2013).
These forms of benefits are designed to protect workers by providing financial support for retirement such as in the case of social security. Worker’s compensation protects workers against lost wages when a worker is injured. This protection is similar with unemployment insurance which pays workers if they lose their jobs.
Benefits go beyond legally mandated programs and come in the form of monetary or health benefits which can be used to increase competitive advantage. Benefits compensation is the payment awarded to individuals for the performance of their jobs. Compensation is provided in a variety of forms including payroll, medical benefits, bonuses, retirement plans and investments. Compensation is an extremely important aspect of human resource development and the overall success of an organization because it can be used to attract the most talented and qualified help.
An organization’s compensation policy is the set of principles and standards through which the organization commits to placing value on its employees. These principles and standards reflect this value through the company compensation practices (Ojimba, 2004). The compensation policy is reflected through many different practices. Some organizations compensate employees with bonuses for achieving specific standards while other organizations compensate employees with healthcare benefits. Good companies recognize the strategic use of compensation and maintain strong philosophies concerning compensation in order to attract, retain, and motivate employees.
Today, most quality companies utilize compensation strategies in order to build competitive advantage. One effective compensation practice which takes into account these concepts is the strategy of compensating individuals by proficiency. Many organizations and government entities require that employees meet ever increasing standards for new levels of compensation. For example, requiring ongoing education and the completion of training programs is a method for companies to challenge and increase the competency of employees using compensation as a reward.
Compensation is often an overlooked aspect of human resource development. This is especially true in small companies and in companies with heavy budget constraints. Companies which lack quality compensation policies may find themselves competing for quality help and facing high turnover. For these reasons, it is vital to maintain a competitive compensation strategy.
Health benefits, retirement standards, and workers’ compensation: Employee benefit plans. (2013). Retrieved from http://www.dol.gov/compliance/guide/erisa.htm
Ojimba, E. (2004, November 4). salary basics — developing a strong compensation philosophy. Retrieved from http://www.salary.com/Small-Business-Advice/advice.asp?part=par410
PrimePay. (2013). Mandated employee benefits businesses are required to provide. Retrieved from http://www.primepay.com/insurance-benefits/mandated-employee-benefits.aspx
Vincent Triola. Thu, Apr 01, 2021. Job Benefits Mandated by Federal Law Retrieved from https://vincenttriola.com/blogs/ten-years-of-academic-writing/job-benefits-mandated-by-federal-law