How a company compensates an employee directly communicates how the company values the employee. Along with effectively performing a job, how one is paid acts to reinforce self-esteem. That is why it is critical to have well designed and administered compensation programs.
There is literally a “market basket” of means by which an employee can be rewarded. Among them are:
- base compensation
- short term incentives
- long term incentives
- spot and/or recognition awards
- project completion awards
- innovation awards
- non-cash rewards
- alignment with performance review systems
When considering all the possible means by which an employee can be rewarded, the design and implementation of the reward and its delivery, attendant administration, and likely annual compensation planning to align with budgeting, one recognizes the need for management of total rewards. Add to that the compliance issues related to compensation and the accuracy and retention of information becomes even more important.