Impact of Non-Monetary Rewards on Compensation Management

Running Head: COMPENSATION MANGEMENT 0
Compensation management
Impact of Non- Monetary rewards
System04122
2/14/2019

COMPENSATION MANAGEMENT 1
Compensation management is a practice of an organization that involves monetary and
non- monetary benefits. Compensation program is a dynamic process if it is with correct
executive benefits (Landsberg, 2012). Non- monetary benefits are those kinds of benefits like
flexible hours of work, discounted parking, free beverages and food, on job child care facilities,
discounted gym membership, in- office massage and yoga, casual Fridays, cross training, fun
activities and office parties which are provided by an employer to the employee which are above
the compensation packages like salary, which is usually motivate the employees (Carroll, 2019).
These things are done to compensate for the time they give to their job. Non- monetary
compensation is very essential in the development of the total compensation management. In
today’s world employees give more importance to the non-monetary benefits rather than the cash
or salary. Employers who offer good non- monetary rewards actually stand out among the peers
(Sonawane, 2008). There are various kinds of non-monetary benefits such as rewards and cross-
training and all these things have advantages and disadvantages both, advantages such as,
encouraging employees, positive work place relationships and motivation to the employees while
disadvantages are that these things are usually coastally and time consuming. This research is
done by using secondary sources and this is a descriptive research of how compensation
management is impacted by the non- monetary rewards, different types of non-monetary benefits
and their advantages and disadvantages.
There are various types of non-monetary compensation; it can actually include a lot of
different elements such as discounted parking, picnic or free coffee. Most of the times it refers to
more of traditional benefits, these benefits usually include things such as Medicare, insurance or
social security, it also includes various voluntary benefits like- dental and health insurance also
mostly it includes some type of retirement plan as well (Carroll, 2019).

COMPENSATION MANAGEMENT 2
The most important reason because of which the employees highly value non- monetary
compensation in the total package is that it is easier for them to reduce their household expenses
for example: giving an employee health insurance can save a lot of money for him and his
family. Apart from the all the material benefits there are some other benefits, some companies
offer their employees with very rich retirement plans which also send a very good message that
they value their employees and also want to support and promote long term relationships with
their employee (Peluso, Innocenti & Pilati, 2017). The employees nowadays are looking the
organizations that invest in the employees by providing a fair salary and a fair benefit package.
Nowadays employees choose firm (Carroll, 2019). that offers a good compensation package
rather than the one, which pay high with little benefits.
There are many benefits of the non- monetary compensation plan for the employees. For
an employer is necessary to focus on the increasing value of non- monetary benefits for the total
compensation package, the most important reason for this that government gives companies a
lot of tax incentives for the different types of benefits they offer to the employees (Williams,
2019).
Apart from this offering certain benefits can help in increasing retention among the
employees, for example as when an employee is given more cash per paycheck the reward is
instant but really short lived, but when an employee is offered with benefits for the retirement
plan, which contributed to their life after few year, it increases an employee’s interest in the job
and it helps them in staying longer with the organization. Such investments can bring the
employer savings as it lowers the employee turnover and the organization gets committed
workforce.

COMPENSATION MANAGEMENT 3
Non- monetary benefits also help in attracting top talent, in today’s world a lot of top
performers are looking for organizations that not only provides cash compensation but other
basic benefits also. Employees nowadays look for a job which has flexible shift timings,
education benefits and well trained manger to work for such things are nowadays more important
the other traditional benefits
Using Maslow’s theory to reward and motivate the employees:
Motivation and reward is something which is really important as it reduces the employee
turnover and gives high proactivity. A lot of time the employees leave good companies due to
this single issue. Maslow’s theory of needs show the basic need of all the human beings. It is
explained through a pyramid which has the largest and the basic need at the bottom and other
needs at the top of the pyramid (Lester, 2013).
self- actualization
Esteem
Love and Belonging
Safety Needs
Physiological Needs