Effective Compensation Plans.docx - Running head Effective...

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Running head: Effective Compensation Plan 1 Effective Compensation Plan Name Institutional Affiliation Date of Submission
Effective Compensation Plan 2 Effective Compensation Plan Introductions A compensation plan refers to a complete package that provides details of the wages, salaries, benefits as well as terms of payment of the employees of a particular organization. Additionally, the plan further incorporates bonuses, incentives as well as commissions details the organization may pay its employees. This paper examines the basic components of effective compensation plans. In addition to that, the paper further identifies and examines the most beneficial ratio of internally consistent as well as market-consistent compensation systems. Moreover, the paper also identifies some of the methods utilized by the organization to effectively evaluate the employee satisfaction as far as the pay structure is concerned and also how organizations can determine if the employer-sponsored retirement plans and health insurance programs are competitive. Lastly, the paper recommends two high-value discretionary benefits to employees. Components of an Effective Compensation Plan For a compensation plan to be considered effective, it has to incorporate various essential components, this part examines some of the key components that make a compensation plan effective (Aquila & Rice, 2017). Some of the identifies components include: The plan should have overall objectives . This is important because it provides an explanation of how the compensation program helps in supporting the needs of; business, the needs of the employees, shareholders as well as the needs of the customers
Effective Compensation Plan 3 Competitive reference points . The formulated compensation plan ought to describe the comparative group for the specific or particular rewards package under consideration. In simple words, the plan has to define the program benchmarks. The relative importance of compensation . This means that the compensation program ought to explain how the rewards program compares with other company identifiers.

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