The Comfort of Compensation

To play this game, you will need to download a free image of a bar stool by clicking here or drawing the bar stool yourself on a piece of paper. Now that you have your stool in your possession, let me take this time to explain compensation and benefits visually. 

When an organization decides to create a compensation and benefits system, there are actually three components at play. The mix of these three elements must attract and sustain qualified people and are collectively referred to as "what a company does to make a job attractive/sexy". They are:

  1. Direct Financial Compensation: This is how most of us view compensation. Direct financial compensation refers to wages, salary, commissions – essentially any compensation that is disbursed in a monetary form.
  2. Indirect Financial Compensation: This is an area of compensation related to any benefits a company might offer. A benefit would be something like a 401k or tuition reimbursement.
  3. Non-Financial Compensation: This is an area of compensation that few think about or even consider compensation. This area of compensation might include having sound policies and procedures, a boss who is skilled and able to provide you with guidance and direction, and even your ability to have some autonomy in determining your workplace outcomes.

Now that you know the basics of what each of these elements entails, I would like you to take a writing utensil and write each element's name, placing one element on a separate leg of the stool. Once you have written all of the elements on the stool, take the piece of paper and sit on it. That's right – take the piece of paper and sit on it. Now, while you are sitting on this piece of paper, think about how all of this stool's legs are, in fact, even, and if this were a real stool, you would likely be able to sit on it without any issues. This is the goal every organization wants to or should be trying to achieve when developing a compensation and benefits program. 

Now – remove the piece of paper and look at the three legs with the individual compensation elements listed. As you are looking at the stool this time, think about your current place of employment. Using your foundational understanding of compensation and benefits as listed above, I want you to rip the leg on this sheet of paper if this leg of compensation at your current place of employment is deficient. If more than one leg is deficient, rip each leg. Please keep in mind that you should only rip the leg relative to the percentage you feel this area of your compensation lacks. For example, if an element in your opinion is 50% lacking, you should rip that leg in half. 

Now that you have ripped the legs, think about trying to sit back on this broken stool. This is the challenge an employer faces when trying to manage human capital. He or she must create a system that is attractive to each employee in the organization. Whenever an employee feels a leg is deficient, they respond in several ways, up to and including leaving the company. The ultimate goal in defining compensation and benefits is to create a system that will allow all human capital to sit comfortably on their stool. Hopefully, this exercise has piqued your interest to want to know more about compensation and benefits – so let's begin!

Source: Saylor Academy
Creative Commons License This work is licensed under a Creative Commons Attribution 4.0 License.

Last modified: Thursday, October 29, 2020, 3:26 PM