Employee compensation and benefits are sub-disciplines in human resources. Though closely related, compensation refers to monetary payments such as tips and wages while benefits are forms of value, other than monetary payments that an employee receives for contributing to an organization’s success or operation (DeCenzo & Holoviak, 2009).
Employee benefits include health life insurance, vacation, maternity leave, retirement plans, disability insurance, and employee stock insurance among others (Green & Rowell, 2011). On the other hand, compensation entails salary, tips, wage structures, and programs. Compensation can either be a variable or base pay (Smith, 2014). Variable pay is given according to the achievements of an individual person within an establishment.
For example, a nurse gets a variable pay according to the number of children she/he reaches during a vaccine outreach to the villages. Base pay depends on the role in the organization and market required for expertise to conduct that role (Green & Rowell, 2011). For example, Saint Thomas hospital has a role to market itself and give the workers an opportunity to showcase their capabilities (Jones, 2011).
Benefits are either tangible or intangible. Maternity and paternity leaves are good examples of tangible benefits. A female or male nurse is entitled to leave for three months and three weeks respectively, though this varies from country to country (Green & Rowell, 2011). Disability insurance is also a tangible benefit as it is given when the worker gets serious injuries that deform him or her, making them incapable of doing most of their duties (Jasper, 2009).
When a nurse by bad luck gets disabled when operating a hospital equipment or machine during working hours, she/he is entitled to a disability cover. The likelihood of being given promotion, appreciation of a job well done by the management, and even a conducive working environment are some of the intangible benefits that are common in many hospital establishments (When Your Employee Takes You to Court, 2014).
For example, a nurse is likely to get promoted when she/he is committed to his/her job than when he/she is less committed. Good services offered by a nurse are worth appreciations from the management. The good working environment the worker stands to get after offering such good services may include, clean wards, availability of working equipment, and even good relations with other staff members and patients at large. Nurses who work in a conducive environment enjoy intangible benefits.
Some benefits are regulated by the law. The workers have the right to earn some benefits because they are stated by the law that they must be provided. Some benefits are organization tailored (Green & Rowell, 2011). This refers to how different organizations come up with ways of providing benefits to their workers.
Compensation is equity-based. It can either be internal or external equity (Green & Rowell, 2011). Internal equity is the extent to which employees perceive their duties and compare their performance with other staff members from similar positions. External equity entails having similar practices with another establishment. For example, St Paul’s hospital has practices that are similar to those of Dr. Smith’s Clinic in terms of compensation.
In a nutshell, employee benefits and compensation are both ways of giving rewards and remuneration to members of staff and catering for their wellbeing while still underemployment or when under retirement. The difference between the two is that compensation is mainly monetary while employee benefits are enjoyments given to employees: not in a monetary form.
References
DeCenzo, D. & Holoviak, S. (2009). Employee benefits. Englewood Cliffs, N.J.: Prentice-Hallll.
Green, M. & Rowell, J. (2011). Understanding health insurance. Clifton Park, NY: Delmar Cengage Learning.
Jasper, M. (2009). Veterans’ rights and benefits. New York: Oceana.
Jones, W. (2011). Money Management of Employee Benefits. Compensation & Benefits Review, 3(4), 56-59.
Smith, J. (2014). Understanding childhood obesity. Jackson: University Press of Mississippi.
When Your Employee Takes You to Court. (2014). Compensation & Benefits Review, 14(4), 67-70.