Business Transformation Leader Salary
Business Transformation Leader Salary – If organizations want to reward their employees fairly, they need to understand the different types of compensation and how to create attractive compensation packages for their employees. Let’s look at the different types of compensation that employers can offer.
Compensation refers to any payment made by an employer to an employee during his employment. In turn, the employee will provide his time, work and skills.
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This compensation can be salary, wages, benefits, bonuses, paid vacation, retirement funds, stock options, and more. Compensation is also sometimes referred to as compensation outside the United States and Canada.
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Understanding the different types of compensation is critical to creating an attractive compensation package for your current employees. This will not only help you retain top talent, but also attract new talent to your organization as long as you differentiate yourself from your competition.
HR and compensation and benefits professionals are responsible for conducting compensation analysis and creating a solid compensation strategy. If an HR team is not established, it is usually undertaken by the business owner or manager. If this is not your area of expertise, using the right compensation metrics can go a long way.
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Let’s say you haven’t given much thought to your compensation and benefits strategy yet. If you do, you may be missing out on an opportunity to improve the overall happiness and engagement of your employees, as well as your retention rates and employer brand.
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Reward plans vary from country to country. For example, in the US, health benefits often make up a large portion of an employee’s compensation and benefits package. On the other hand, in some parts of Europe, parental leave, child care and lunch expenses are more frequent.
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Anyone involved in creating an employee compensation plan and compensation structure must first understand the different types of compensation. This is because it is the responsibility of the organization to explain the compensation plan to all candidates and employees. This is especially important during the recruitment process and during performance and salary reviews. With so many different options available in the two main types of compensation, it’s easy for employees to get confused.
Direct compensation is a form of financial (or monetary) compensation. Here are the four main types of direct compensation:
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Hourly wages are often provided to unskilled, semi-skilled, temporary, part-time or contract workers in exchange for their time and labor.
Hourly workers can usually earn overtime pay. This salary consists of additional hours worked outside of their fixed contract.
Annual salaries are generally provided for most full-time or skilled workers and those in managerial positions. A salary often indicates that the organization has invested in that employee for the long-term future.
Commission is a common form of compensation provided to employees who perform sales duties. This will usually be based on a predetermined quota or target. The higher the quota reached, the higher the commission will be.
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Companies often offer bonuses to employees based on year-end business results or the individual achieving their goals. Sometimes the decision is made by the manager.
Both commissions and bonuses are included in incentive pay, along with piece rate, profit sharing, stock options and exchange differentials.
However, bonuses can also be paid if the employee does not meet a certain target. For example, if a company has had a great year and decides to reward everyone. In this case, the bonus would be classified as variable pay.
Merit pay is often given to an employee who achieves their goals or performs well in their duties.
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Indirect compensation is still a financial form of compensation because it has a financial value. However, employees do not receive it directly in cash. Therefore, some types of indirect compensation are considered monetary, while others are considered non-monetary. This often varies from organization to organization.
Equity as part of a compensation package essentially means that the employee is offered capital (ownership) of the company through shares of stock or the option to purchase such shares.
Shareholding is common in start-ups. These companies may have little cash or funding and need other incentives to attract and retain employees.
This type of compensation gives employees the right to buy a certain number of shares at a fixed price after a certain period of time. This differs from an equity package in that the employee will not have ownership in the company.
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Many stock options require employees to work for three to five years before they can access this compensation.
Typical employee benefits usually include health insurance, life insurance, retirement plans, disability insurance, legal insurance, and pet insurance.
Health care is a common benefit in the US, as discussed, because it is expensive to purchase. In the UK, on the other hand, NHS healthcare is free.
Pension funds and retirement plans are also common benefits that employees look for when considering a new role in a new organization.
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The survey found that 48% of job seekers in the US said they would be more likely to apply for a job that offered good benefits. So while the base salary you offer is important, it’s important to think about your overall compensation package.
A Fractl survey found that American workers value healthcare the most as a benefit. However, additional forms of indirect compensation, including additional vacation time, day care, and tuition reimbursement, also made the top list.
Silicon Valley companies offer their employees a variety of increasingly enticing perks, including concerts, on-site yoga classes, massages, free lodging during vacations, foosball tables, and catered lunches.
While some of these types of compensation may seem small or unnecessary, they can make a big difference in your employee’s day. This can improve their overall happiness both in and out of the workplace.
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It’s important that you offer a variety of benefits that will appeal to the different types of people you employ and want to hire in the future. For example, if one of your employees has just become a new parent or is looking to start or expand a family in the next few years, they will appreciate benefits like parental leave and childcare.
Also, certain types of compensation can be seen as both an advantage and a disadvantage, depending on the terms you apply to it. For example, if you give all employees a company laptop, do they have to keep it for business purposes only, or can they use it for personal use? Some individuals may find using two laptops a problem. Others may not like the idea of a company tracking and monitoring their entire private browsing history. That’s why it’s important to find out who your key employees are and what they want before creating a compensation plan.
An employee’s total compensation consists of a compensation package consisting of all applicable types of compensation listed above. Total compensation can (and will) often include different rewards and benefits at different job levels.
Communicating total compensation to employees is helpful. They have a clear idea from the start of everything they are entitled to and the different types of compensation offered. For example, breaking down base salary, bonuses, and commissions will help employees understand what they are automatically entitled to and what they need to meet goals to earn.
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You can sort your compensation into two different columns: direct compensation and indirect compensation. Or you can go a step further and break compensation down into different subcategories within each one, such as health care, company car, stock options, and pension fund.
Each new employee should receive a full, clear overview of total compensation and should contact a manager with any questions. This means that all managers should have at least a basic understanding of the compensation package on offer. They should be able to explain how it works and answer any questions that arise.
Research has shown that when an organization is progressive and transparent with pay management, employee engagement increases, turnover decreases and your employer brand gets a boost. That’s why HR teams need to be strategic about the total compensation packages they offer employees and how they present it at all stages of the recruitment and employment process.
The base compensation package is set by law, so your team needs to ensure compliance with this ever-changing legislation. A generous remuneration package will inevitably help you stand out from the competition and attract the right talent to your organisation, as well as help retain existing employees.
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Understanding employee benefits and compensation options and creating attractive compensation packages for all employees is essential to attracting the best talent to your organization and keeping those employees happy.
Many organizations offer similar salaries, so when an employee is choosing between two different job offers, they are likely to compare the smaller details included in the compensation plan. It’s an organization that offers small perks like free lunch and extra vacation time
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