Case Study

Mr Joel Whyte was the presenter at the Compensation Conference in 2021. The theme at the conference wasThe Importance of a Compensation Package. Compensation refers to all forms of financial returns such as tangible services and benefits employees receive as part of an employment relationship, which may be associated with employees service to the employer such as provident fund, gratuity, insurance schemes and any other payment which the employee receives, or benefits he/she enjoys in lieu of such payment. As a result, the basic knowledge of the operational cost of organizations is not enough to be a successful manager. Mr Whyte explains that to compete successfully in an increasingly competitive global market, a company has to know the costs of its entire economic chain and has to work with the other members of the chain to manage costs and maximize yield. Companies are therefore beginning to shift from costing only what goes on inside their own organizations to costing the entire economic process, in which even the biggest company is just one link. The compensation package, the legal entity, and the company are realities for shareholders, for creditors, for employees and for tax collectors.

Question A. Define the term compensation.

B. Explain TWO (2) reasons why the knowledge of compensation is important to the successful operation of an organization.

C. Describe FOUR (4) factors that will affect the compensation package in an organization.