Compiling workers compensation is already the responsibility of the company that must be implemented. Compensation itself is a reward given by the company to its employees.
The reward is given because of position, achievement, performance, or even an accident at work. The provision of compensation is very important and must be included in the financial budget.
In fact, for prospective employees compensation is an important consideration before joining the company. If the compensation feels suitable and profitable, then employees will be happy to join.
The importance of compiling workers compensation because it can indirectly save a lot of recruitment budget. Because, when employees are matched with their compensation, they tend to last a long time.
As it is known that the cost of one-time recruitment procurement is not cheap. Companies have to spend quite a lot for that. Unfortunately, many companies are still confused in the process of compiling compensation. Therefore, in this discussion we want to share an easy way for you.
Getting to Know the Different Types of workers compensation
Before discussing further about how to arrange workers compensation, you must first understand what the types are. In general, compensation in the company is divided into four. The following is an explanation of each of these types:
1. Salary
Salary is compensation that must be given to employees. This type is assessed from the performance and position of the employee and the value tends to be constant and only increases periodically. The salary itself is given at a certain time by the company.
What you need to understand is that salary is different from wages. Wages are given to employees or workers without being tied to a certain time frame. So, it can be given when the employee finishes doing his job right away.
2. Incentives
When compiling workers compensation, in some companies incentives are always included. Incentives are special rewards for employees outside of their salary.
The amount of this incentive can be based on the employee’s performance or for working on a particular project. In essence, this type is given when the company gets extra profit.
3. Facilities
Facilities are also included in compensation to support employee performance. The purpose of this compensation is to make work smoother and employees more comfortable.
This type is given in the form of goods or places. For example, official homes, office vehicles for mobility, electronic devices, and many others.
4. Allowance
Allowance is a type of compensation that can be disbursed under certain conditions. For example, health benefits, old age benefits and many others.
Formula for Compensating Workers Compensation
Compensation in the company is further divided into two, namely fixed and variable compensation. What you need to know in fixed compensation is different from variable. An example of fixed compensation is salary or wages.
Meanwhile, what are not fixed are incentives, allowances, and facilities. Simply put, variable compensation is an added value to an employee’s salary or wages. If the salary value tends to be fixed, the benefits may change according to the parameters set by the company.
However, for compiling workers compensation, the two types are still interrelated. The more employees exceed these parameters, the greater the compensation value received.
For example, a marketing salesperson who will get an allowance if he succeeds in selling goods according to the target. When the sales exceed the target, the allowance will be greater.
Likewise with other types of compensation. As long as employees earn profits for the company, their value will continue to increase.
Now it’s just a matter of how the company arranges the workers compensation. Of course, this value must benefit the company and employees. The following is a general formula for calculating the value of benefits for employees:
- Compensation remains worth 70 to 80% of take home pay (P).
- Variable compensation of 20 to 30% of take home pay (Q)
- Base salary has a value of about 70 to 80% of the P value.
- The job allowance has a value of about 50 to 60% of the P value.
- The operational allowance has a value of about 30 to 40% of P.
- Transport allowance is about 50 to 60% of the Q value.
- Meals have values ranging from 30 to 40% of Q.
Each company certainly has its own formulation that is most suitable. However, the above formulation is the most common for every company. Now you don’t need to be confused anymore to determine compensation. Use the method above to structure workers compensation.
