Compensation and Benefits: A Checklist for Success
January 1, 2010
By: John A. Leonard
- Successful companies understand the changing mix of compensation and benefits and when to use them.
- Successful companies use the three team approach.
- Internal team.
- External team.
- External network.
Understanding the Changing Benefit and Compensation Mix.
Attracting, retaining and motivating personnel require a mix of benefits and compensation that is custom-made for a particular company. Levels of compensation and variety of benefits will vary from standard “non-discriminatory” benefits offered to all employees to specialized benefits and compensation for particular individuals or sets of individuals. The key is to align compensation and benefits with particular goals and measure their success.
- Voluntary Benefits.
- Medical insurance with option for dependent coverage.
- Dental insurance.
- Eye care.
- Life insurance.
- Disability insurance.
- Flexible work schedule.
- Paid time off.
- Company-wide paid vacation days.
- Health savings accounts.
- Health maintenance organization (HMO) or preferred provider organization (PPO).
- Cell phone.
- Auto allowance.
- Satellite work places.
- Job sharing or part-time work.
- Legal Employment Benefits.
- Family and Medical Leave Act.
- USERRA (military service leave).
- FLSA (minimum wage, overtime).
- Colorado Wage Act Issues.
- Employee/Independent Contractor Issues.
- Employment Agreements.
- Confidentiality and Non-Compete Agreements.
- Separation Agreements.
- 401(k) with or without matching.
- 401(k) with or without matching.
- Short-Term Incentives.
- Performance unit plans.
- Stock appreciation rights.
- Profit sharing.
- Annual bonus.
- Long-Term Incentives.
- Restricted stock.
- Non-qualified stock options.
- Qualified stock options.
- Stock bonus.
- Phantom stock.
- Internal team: Successful companies use an internal team to review the types of compensation and benefits available and match compensation and benefits to individuals or sets of individuals in order to achieve specific company goals. The impact of a growing or declining economy, the stage of growth for a particular company (early stage vs. mature) as well as specific company goals all determine what types of compensation and benefits a particular company should use. Leadership from key executives (e.g. CFO, HR, Sales) is essential to identify company goals, company resources, and the proper mix of compensation and benefits. “Buy-in” from the affected individuals or groups is key.
- External team:Successful companies use external advisors in order to implement compensation and benefit packages. Attorneys and benefit experts can explain the range of compensation and benefits that are available and help a company determine which benefits are best for particular long-term goals, short-term goals, and employee attraction/retention. Accountants and lawyers can help advise how to comply with tax, financial, and legal rules. Attorneys draft plan documents in order to comply with the foregoing.
- External network:Successful companies cultivate an external network to keep it up-to-date with the changing mix of compensation and benefits. The changing economy and changing demand for particular goods and services affect the company’s benefit and compensation package. Organizations and publications are available and tailored to specific industries or type of company (small vs. large, profit vs. non-profit, etc.) to assist a company’s HR executive maintain a clear understanding of what types of compensation and benefits are being used for particular types of companies or situations.
This Article is published for general information, not to provide specific legal advice. The application of any matter discussed in this article to anyone's particular situation requires knowledge and analysis of the specific facts involved.
Copyright © 2010 Fairfield and Woods, P.C.,ALL RIGHTS RESERVED.
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