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Compensation, Benefits, Stakeholders for Businesses

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1. List and explain the differences between discretionary and legally required (mandated) benefits. Why do companies need to provide both to employees?

2. List and explain the five different stakeholders of a company's compensation system.

3. Why is strategic compensation important for the long-term success of a company? Provide detailed steps that company should take to create a long-term strategic compensation plan.

Course Textbook
Martocchio, J.J. (2013). Strategic compensation: A human resource management approach (7th ed.). Upper Saddle River, NJ: Prentice Hall.

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Solution Preview

1. List and explain the differences between discretionary and legally required (mandated) benefits. Why do companies need to provide both to employees?

Benefits for employees are nonmonetary rewards that help entice or compensate employees, as part of their employment package. Some benefits are legally required (i.e., mandated by the government). The government requires employers to provide Social Security and worker's compensation (U.S. Small Business Administration, 2017). Some states also require employers provide wage replacement insurance coverage to eligible employees (U.S. Small Business Administration, 2017).

Other benefits are discretionary. According to Martocchio (2013) discretionary benefits became a way for organizations to reward existing or entice future employees during periods of federal government wage restrictions. Discretionary benefits fall into three categories: paid time off; services, and protection programs (Martocchio, 2013). Paid time off is when employers provide employees with pay for time that they did not work. An example of paid time off is vacation days. Services are special programs available to employees, as a result of their employment. Examples of services are day care, tuition assistance/reimbursement, and matching philanthropic donations made by employees. Protection programs are items that help ensure the employee will be protected from catastrophe. For instance, many companies offer life insurance to their employees, as a discretionary benefit.

It is important for companies to provide both legally required benefits and discretionary benefits to ...

Solution Summary

This detailed solution provides human resource management information regarding strategic compensation. It is APA formatted and more than 200 words for each question. It describes why strategic compensation is important for a company and how to make a detailed plan, it lists and explains five different stakeholders in company's compensation system, and explains the difference between discretionary and required benefits.

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