What Is the Difference Between Compensation and Benefits, and How

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The Answer is Compensation is the money that has been determined appropriate for specific pay ranges (pay bands) for each position, which in the hospital industry includes more than 300 distinct jobs or major job classifications (Metzger, 2004). The management of compensation begins with a clear definition of the HSO's compensation philosophy, which reflects the organization's mission, values, and strategic goals regarding HR, as well as consideration of internal (e.g., equity) and external (e.g., competitive) factors (Gering & Conner, 2002; Joiner, Jones, & Dye, 1998).
Determining compensation refers to the establishing of a specific financial value for a job. Compensation for each position is set based on the consideration of several factors, including the specialized knowledge and skills associated with the position, experience required for the position, relative availability of skilled individuals to fill the position, and average wages that are specific to the local labor market. This is called job pricing (Joiner et al., 1998). Some positions are hourly rated (i.e., referred to as nonexempt and eligible for overtime pay), where a compensation rate per hour of work is established (e.g., for maintenance staff and floor nurses). Some positions are salaried (i.e., referred to as exempt and not paid overtime), where an annual salary is paid the employee (e.g., nurse managers and other managerial staff). Generally, exempt versus non-exempt job categorization is determined by salary level and duties (U.S. Department of Labor, 2008a). Pay ranges will vary by type of position, but within a position class there must be equity which is one of the objectives behind job banding. However, HSOs typically account for differences in training, experience, and special considerations of the job (working weekends or evenings) by allowing for pay/shift differentials. Also, some jobs are subject to significant external market pricing, because the skill set is unique, and the market is national or international.
A benefit is defined as any type of compensation provided in a form other than salary or direct wages, that is paid for totally or in part by an employer Griffin, 2017). As benefits extended to workers, in general, have increased over the past two decades, the number and type of benefits made available to HSO employees have increased as well (Runy, 2003). However, the HSO is faced with a dilemma. On the one hand, HSOs are under pressure to manage costs, and employee benefits have been a high-cost item for HSOs, which directly affects the HSO's cost management strategy, financial status, and competitive position. On the other hand, benefits as a portion of total compensation have increased in importance, as more and more employees indicate that benefits are important in their choice of an employer (Runy, 2003). Today, the top three reasons employees select a company, in priority order, is (1) company culture, (2) ability to progress in one's career, followed by (3) benefits. Future predictions, five-years out, suggest that "flexible working situations" will be the number one reason an employee joins a company (Maurer, 2017, para. 8). This is good news for the HSO because flexibility is not a hard dollar expense.

What Is the Difference Between Compensation and Benefits, and How

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