Answer 3 for HRM 635 Identify and explain two elements of the total compensation package that promotes organizational competitiveness that attracts and retains employees

The two main components of the compensation package that promotes organizational competitiveness that attracts and retains employees are direct financial payments (wages, salaries, incentives, commissions, and bonuses) and indirect financial payments (financial benefits like employer-paid insurance and vacations (Dessler, 2020).

The direct financial payments consist of wages, salaries, incentives, commissions, and bonuses. This form of payment is based on the employee’s job responsibilities and performance, as well as competency and experience. This form of compensation is an advantage and is more favored amongst employers since it motivates employees to improve their performance. The downside is that this can be expensive especially when the employee is not the right fit. Indirect financial payments are received in the form of vacations, memberships, retirement plans, and employer-paid insurance. Though these incentives might appear attractive to employees, it does not have the same impact as direct compensation.

My organization offers both direct and indirect compensation packages. However, certain aspects of both affect how they are received. For example, as stated earlier, the monetary value is received differently. Direct compensation is earned as salaries, wages, etc, whereas indirect compensation is memberships, vacations, and retirement plans. Experience is another component that varies by compensation. With direct financial payments, employees who excel in their performance receive a bonus or increase in pay. An example of this would be when my organization offers bonuses at the year for meeting or exceeding organizational goals for the year. On the other hand, indirect financial payments might not be received after a few months or years with the company. An example of this would be when my organization allows for an employee to establish a retirement plan after two years with the company.

Dessler, G. (2020). Human resource management, 16/e (16th ed.). Pearson Education