How Do Environmental Factors Shape Compensation and Benefits? Share Your Insights

Impact of Environmental Factors on Compensation and Benefits

Please share your views on how environmental factors affect compensation and benefits. I am trying to search for articles on the net but have not found any relevant ones. Please share your experienced highlights.

Regards,
Sanjukta

I am wondering if someone will come up with a valid reply, but I cannot wait for so long. I thought this might be the one thing that I need to share with people who do not have an answer. I have found the answer. I have come across a good PowerPoint presentation on Compensation and Benefits, which might help you learn more about the subject. I will keep posting a few more files that I found while making the Compensation and Benefits training PowerPoint. Here it is.

Regards,
Sanjukta

Numerous examples exist, such as demographic, psychographic, and technology.

Examples of Life Stages

In old times, there were four stages in life. People used to engage in full-time study, then work, and eventually retire. Now, the model has evolved. People can learn, earn, and enjoy concurrently.

Impact of Population Sizes

It is crucial to check the population sizes of children, young adults, retirees, etc., as they significantly impact who will fund social security benefits and whether we have an adequate skilled workforce.

Technology's Influence

Technology can exert pressure on a target population. For instance, the rise of online tuitions due to improved telecom infrastructure and software may lead to a scarcity of talented teachers, resulting in schools having to pay more. Individuals may also choose to switch careers.

Career Anchors

There are nine career anchors in a person's life; refer to the RSI instrument for more information.

Environmental Awareness

The rise of environmental awareness can prompt industries to relocate from one place to another.

A valuable piece of advice for you would be to pursue formal learning in compensation and benefits. Feel free to ask any questions.

I am a certified Compensation and Benefits Manager.

Regards

Dear Surya, thank you for your innovative reply. Could you please tell me what the challenges are in building effective compensation when compared with the rise in expenditure of simple living?

Regards,
Sanjukta

There is no innovative aspect in my answer to your query above. It was simply well-informed and comprehensive.

Cost of Living Indexation

"Cost of living indexation" is simply an annual exercise that is taken care of by variable DA in the case of minimum wages and factored into annual increases. Salaries cannot increase in perpetuity.

Factor in global equity (worldwide) and external equity (outside the company) before allowing for increases as mentioned above. For example, a government sweeper gets X amount, and a private contractor hires 5 sweepers on the same salary. Changes in legislation or technology can alter this altogether.

It's nice to know that some people can attain so many credentials in their careers. Indeed, we can learn a lot from people like you, Surya. I hope you'll try to interact more frequently and engage yourself in the discussions of various topics here at Cite HR.

The Environment's Role in Compensation and Benefits

The environment is a vast area to consider in compensation and benefits. If one were to look at the annual studies conducted by major international consulting companies like Hay Group, Hewitt, Mercer, etc., you would see that their focus is more on the C&B practices of organizations operating in the areas where their studies are conducted. However, the market data and reports they produce only serve as reference materials in determining a company's C&B—whether their existing pay and benefits are externally competitive or not.

Factors Influencing C&B Structure Changes

There are three other factors that typically come into play when top management in an organization decides to make changes to their C&B structure. These factors are: the employees' demand for internal equity, the organization's ability to afford the total C&B cost, and the overall capability of the organization to sustain the total C&B cost in the long term. I refer to these factors (along with the market data) as the "basic principles in compensation."

Best regards,

Ed Llarena, Jr.

Managing Partner

Emilla International Consulting Services