Compensation is defined as awards in the form of money or benefits provided to employees by employers, in exchange for their labor. Compensation occurs in two main ways, directly or indirectly. Direct compensation is characterized by pay, commissions or both. On the other hand, indirect compensation is comprised of aspects such as benefits and allowances (Phillips and Gully, 2013).
Changing workplace trends have called on organizations to review their compensation structures. In the present work environment, employees are more inclined to benefits that enhance the quality of life, rather than those that are financial in nature. As a result, organizations have restructured their compensation schemes to accommodate these changes.
This strategy is an effort to make the organization an attractive place to work, reduce employee turnover and ensure their employees are happy. For such organizations, employee performance has greatly improved, resulting in better profit margins for the organization, as well as satisfied customers.
SAS is one organization that has embraced the new compensation order. The company, one of the largest software companies in the world, deals in business software and data intelligence. The company boasts of more than 40,000 customers and has a presence in 110 countries around the world. The organization is recognized as one of the best places to work in America.
SAS is renowned for its high customer satisfaction rates, low employee turnover as well as their quality products and services. With an employee population of around 10,000, SAS prides itself in having one of the best employee benefit packages in the competitive software market. In order to have well rounded employees, the company has invested in beneficial programs that improve professional as well as the personal aspects of employees’ lives.
In this regard, the company provides benefits like on-site recreational facilities, such as gyms and massage parlors, hence promoting physical wellness amongst their employees. In addition, the company offers subsidized costs in preschool or kindergarten, cafeteria, on-site automobile, hairdressing and dry cleaning. This arrangement not only leads to cost saving, but it also creates convenience for the employees.
SAS encourages its employees to achieve a work-life balance by implementing certain regulations. For instance, all employees are entitled to a three week annual paid leave. This strategy enables employees to rest and regroup their strategy. In addition, the company closes its operations during Christmas and New Year holidays to enable employees spend time with their families and friends.
Although the pay is not as competitive as other software companies, it is comfortable. Furthermore, the benefits mentioned above are additional perks that attract potential employees to the company. The company has customized the pay package for its employees in an effort to remain competitive in the market.
Phillips and Gully (2013) indicate that in order for organizations to attract and retain talent, they are required to customize their compensation packages based on employee needs and expectations. As a result, financial incentives do not necessarily achieve the job satisfaction for employees than compared to a mixture of direct and indirect compensation.
The case study presented above presents the changing concept of employee compensation. As opposed to rewarding employees financially, organizations can compensate employees in the form of benefits. As a result, a company can achieve financial waste reduction by simply introducing benefits such as vacation leave. In the process, this strategy achieves employees’ work-life balance, hence improves performance.
Reference
Phillips, J. M., & Gully, S. M. (2013). Human resource management. Mason, Ohio: South-Western Centage Learning.