The current competitive conditions in the business world make it difficult to acquire and retain the top

talents. Once the organization is able to identify, it can be unable to offer the right pay and to manage the
pay increases to retain top talents. The compensation and benefit is the extremely important piece of the
overall HR Strategy to keep the company competitive and successful. On the other hand, the
compensation and benefit is important to keep the personnel budget under the control and to manage the
jobs in the right salary (pay) brackets.

The compensation and benefit differentiates the organization on the job market and builds the
attractiveness of the company for the top talents. They love to be hired by the attractive organization; they
do not like to be hired by the average company offering the same conditions as any other average
organization in the industry.

Competitive Advantage and Compensation and benefit

Today, the products are similar. It is difficult to distinguish the cars from different car makers. The
employees are in the same situation as the consumers. They have the problem to distinguish the
employers and they are not able to recognize the excellent organization, when it is not different from the
rest. The competitive advantage is the essential part of the mix for the success. The organization has to
present itself differently, not just by the presentation, but it should differentiate itself by the different
approach toward its employees. The compensation and benefit is one of the most successful
differentiators.

The excellent compensation and benefit does not just differentiate the organization from the other
organizations on the job market, it brings the differentiation into the organization as well as the successful
employees and top talents feel the success in their pockets.

The effective compensation and benefit makes people feel the success and they speak about their
successes with their friends. It build the extremely excellent competitive advantage among the
competitors as the people feel, the organization really values the success and it can pay the successful
employees.

The effective compensation and benefit manages the personnel expenses of the organization, but it
supports the performance management and differentiates the employees as the successful ones are not
motivated to search for a new job opportunity. The good compensation and benefit does not provoke
employees to search the web job boards during the working hours, it makes them to focus on delivering
the results as they can be highlighted and they feel the highlight in their salaries.

The successful compensation and benefit gains the competitive advantage and can speed up the
innovation processes and improve the performance management practices in the organization.
For what HR Processes is Compensation and benefit important?
The compensation and benefit is not important just for the competitive advantage, but it supports the other
HR Processes and helps them to become highly efficient HR Processes and being on the top in the
industry (when measured and benchmarked).

The compensation and benefit has a strong influence on the performance of the whole Human Resources,
which is a good vehicle to manage the performance of Human Resources, but has to be managed carefully
as it does not destroy the performance of the whole organization. Smart compensation and benefit
supports the HR Processes and helps to bring the top talents from the job market to the organization and
helps to retain the best talents in the organization as they do not feel the need to find a new job
opportunity elsewhere.

Recruitment and Compensation and benefit Strategy

The effective Recruitment and Staffing cannot exist without the effective Compensation and benefit. The
recruitment can be based on the excellent HR Marketing Policies, but the HR Recruiters have to be able
to offer the competitive salary packages, which are competitive externally and fully aligned with the
policies and the compensation and benefit internally. The recruitment of the best top talents from the job
market cannot be based on exceptions from the compensation policy.

The recruitment and staffing processes have to be supported and backed by the excellent compensation
and benefit as the HR Recruiters can offer the competitive conditions to the right talents from the job
market and they are able to identify the key job positions, where the compensation and benefit allows to
be more aggressive against the pay market.

The job candidates are extremely sensitive to the salary package offered in the Job Offer letter and the
compensation and benefits department should measure the number of failures in the job offer
acceptations. It is the extremely important sign of the wrongly set compensation and benefit, when the job
candidates do not accept the job offers made by the organization.

Motivation and Compensation and benefit Strategy

The salaries or bonuses are extremely important for the motivation of employees and managers.
Generally, the motivation is not about the compensations, but the compensation should support the
general motivation framework in the organization.

Even the best managers in the world are not able to keep highly motivated teams, when the compensation
and benefit strategy is not in line with the job market. The employees usually know the common levels of
salaries in the industry and when the organization is below the median or the average, it has to
compensate the difference in other area. But, when the difference is too high, the compensation by a
different motivation tool does not work and the employees start to feel demotivated as they receive no
equal value for their effort.
Talent Development and Compensation and benefit Strategy

The compensation and benefit strategy provides the key support to the talent management processes in the
organization. The talents have to be clearly supported by the compensation strategy as the talents usually
expect higher salary increases than the average employees and the compensation and benefit has to allow
the limited freedom to managers to do so.

The successful top talents management cannot survive without the adequate support from the
compensation and benefits side. The talents have to feel the different approach of the organization and the
compensation is extremely important in this. The top talents cannot live on the promises for a long time.
They have to see the real improvements and advances. They deliver, they expect the organization the
same.

The compensation specialists have to co-operate closely with the career advisors and career development
specialist to introduce the right mix of the career opportunities and the compensation strategies for the top
talents.

References:
http://www.themanager.org/Knowledgebase/HR/Benefits.htm

Richard M. Hodgetts and Fred Luthans, U.S. Multinationals' Compensation Strategies for Local
Management: Cross-Cultural Implications. Compensation Benefits Review April 1993 vol. 25 no. 2 42-48

Dr. David B. Balkin and Dr. Luis R. Gomez-Mejia, Determinants of R and D Compensation Strategies in
the High Tech Industry 7 Dec 2006 DOI: 10.1111/j.1744-6570.1984.tb00530.x

Richard M. Hodgetts and Fred Luthans, U.S. Multinationals' Expatriate Compensation Strategies,
Compensation Benefits Review February 1993 vol. 25 no. 1 57-62