Blog 3: Web Based Compensation and Planning

Compensation can be defined as employer ability impact to attract and retain employees in organization. This impact is wanted to ensure the optimal level of employee performance in organization’s objective. There are two types of compensation which are, direct compensation and indirect compensation. For direct compensation is form of wages and salary such as base pay and incentive. Normally, incentive is for business because employee will get sales bonuses or commissions. Besides, indirect compensation is form of benefits such as for legally required benefits; employee may have social security or group health benefits.

There are three types of compensation, which are fixed compensation, variable compensation and stock. For fixed compensation, includes bonuses, pay wage and merit pay or cost of living. Fixed compensation is typically set or change on usually annual basis. Each employee usually has only one active fixed compensation record, even though employee who is paid can have more than one.  However, for the variable compensation there are individual incentive plan, group incentive plan, and profit sharing plan and productivity gain sharing programs. The last type of compensation is stocks which are restricted stock and stock purchase plan, phantom stock plan, stock grant, stock appreciation right and stock option.

This online compensation shows a web enabled approach to an array of compensation tools that organization can be gather, store, and manipulate information. According to Leibowitz (1983), there are three types of benefits from the employee’s point of view. First, there are non-taxable substitutes for private consumption expenditures such as employer finance health insurance. Second is there are taxable for private consumption which the employer can provide at low cost quantity. Third, the paid vacation and sick leave which also are taxable. Therefore, employer has their different way to composite the benefit among employees.

The advantages of compensations are the ability to create report and presentation for the management. In addition, let the manager access to the information which is useful both to them and to their employees. Moreover, the compensation also can improve effectiveness in terms of the accuracy of data by technology using system. However, the disadvantage of compensation is none. This is because the technology ultimate HR to their daily task effectively. Therefore, human resources information system helps manager to work faster and effectively to improve productivity among employees parallel with the organization’s goal. Here, an examples of compensation system that management in organization, for instance, the E-Compensation and E-Benefits system.

Reference:

1)      Arleen Leibowitz, (1983). Fringe Benefits in Employee Compensation. University of Chicago Press.