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Running head: Effective Compensation Plan1Effective Compensation Plan NameInstitutional AffiliationDate of Submission
Effective Compensation Plan 2Effective Compensation PlanIntroductionsA 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 theorganization may pay its employees. This paper examines the basic components of effectivecompensation plans. In addition to that, the paper further identifies and examines the mostbeneficial ratio of internally consistent as well as market-consistent compensation systems.Moreover, the paper also identifies some of the methods utilized by the organization toeffectively evaluate the employee satisfaction as far as the pay structure is concerned and alsohow organizations can determine if the employer-sponsored retirement plans and healthinsurance programs are competitive. Lastly, the paper recommends two high-value discretionarybenefits to employees. Components of an Effective Compensation PlanFor a compensation plan to be considered effective, it has to incorporate various essentialcomponents, this part examines some of the key components that make a compensation planeffective (Aquila & Rice, 2017). Some of the identifies components include:The plan should have overall objectives. This is important because it provides anexplanation of how the compensation program helps in supporting the needs of; business, theneeds of the employees, shareholders as well as the needs of the customers
Effective Compensation Plan 3Competitive reference points. The formulated compensation plan ought to describe thecomparative group for the specific or particular rewards package under consideration. In simplewords, the plan has to define the program benchmarks. The relative importance of compensation. This means that the compensation programought toexplain how the rewards program compares with other company identifiers.