Saylor Academy: "The Comfort of Compensation"

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

When an organization makes the decision 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 can be 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 that relates 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 not many of us 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 kind of autonomy in determining your workplace outcomes.

Now that you know the basics of what each of these elements entail, I would like you to take a writing utensil and write the name of each of the elements, 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 the legs of this stool are in fact even, and if this was 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 they are 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 is lacking. Example: if an element in your opinion is 50% lacking, then 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 be able to create a system that is attractive to each employee in the organization. Whenever an employee feels a leg is deficient, he or she responds in a number of ways, up to and including leaving the company. The ultimate goal in defining compensation and benefits is to create a system that is going to 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!

Last modified: Wednesday, July 29, 2015, 1:09 PM