Compensation and Benefits

Subject: Business
Type: Descriptive Essay
Pages: 4
Word count: 1138
Topics: Business Plan, Human Resources, Management


The HR strategic plan determines the employee compensation and benefits.  This plan addresses the payment issue in an organization, whereby the questions of salary structures, allowances, rewards and other detailed in the plan (Bengtsson & Hand, 2013). Notably, a good plan is of vital importance to a business organization because it attracts qualified employees into the organization. The acquisition of qualified employees helps in increasing workforce efficiency, which translates to an improved performance in the workplace as well as improved productivity. Another advantage of a good strategic plan is that leads to increased business revenue to the achievement of a competitive advantage. Employee satisfaction is paramount to ensure a high employee retention rate and it motivates both the new and long-serving employees in an organization. This makes every employee to be goal oriented and work effectively towards achieving the business. 

This project aims at evaluating a compensation and benefits strategy of a selected organization. The evaluation is based on the collected analyzed information regarding the organization. This research provides a structure for an effective compensation and benefits strategy that meets the business organization’s regulatory requirements to ensure that employees’ welfare is safeguarded. Safeguarding employee welfare gives rise to a positive employer-employee relationship. It also contributes to an effective relationship between the organization and the community in which the business operates. HR managers need to communicate and keep employees informed about benefits programs. Moreover, HR professionals should possess the skill of leveraging all available options of employee compensation (Bengtsson & Hand, 2013). I have selected Frito Lay North America as the organization of my choice because I am familiar with all the operations of this company.  

Formal Pay Structure 

Frito Lay North America is one of the well-paying companies across the globe. Every year, the company pays its workers a significant amount of money averaging at $60,879. Notably, Frito Lay North America offers salaries ranging from an annual average of 34942 USD to 94183 USD. Employees at Frito Lay North America with the job title “Sales Director” appear to merit on the list of highly paid employees with an average pay of 141000 USD a year. Employees who have the job title “Packer” are the least paid in the company with an average salary of 16200 USD a year. Employee benefits provided by Frito Lay North America include health insurance, 401 K plan, and Maternity & Paternity leave (“Frito-Lay – Good Fun!,” 2016). 

Benchmarking Activities

Compensation benchmarking refers to process of making a comparison of an organization’s compensation practices and levels against other organizations’ practices. Compensation benchmarking involves the assessment and interpretation of market data and comparing it against the target business organization with regards to Meridian Compensation Partners. Technological advancement such as the increased internet use makes it easier for one company to research other companies’ pay structure especially the rival companies. With regards to this, Frito Lay North America evaluates its competitors such as   Mondelez International, Inc., Conagra Brands, Inc., and Kellogg US. Snacks Division (“Frito-Lay – Good Fun!,” 2016). It compares its pay structure with that of these companies and works towards providing the best option for its employees.  

Types of Employee Compensation and Cost of Benefits

Employee compensation involves all the costs incurred by a company for that employee. For example, medical insurance and retirements benefits for employees are costly to any business organization. Taxes paid by the company are also other compensation types.  Frito Lay North America provides various types of compensation to its employees, including maternity & paternity leave, 401K plan, and health insurance. The company has to spend a lot in providing these services. For instance, it has to recruit a relatively high number of employees in order to effectively run its operations and avoid any distractions when some of the employees fall sick or go for maternity and paternity leaves. When recruiting or compensating injured patient, Frito Lay North America spends twice as much as the salary as a baseline of including compensation benefits. This expenditure covers the costs related to recruiting full-time employees who are eligible for all the available benefits. Most snack-providing companies in the region are competing to gain a competitive advantage, hence Frito Lay North America strives to provide optimal working conditions that safeguards employee welfare, so that it can always attract highly skilled and qualified employees. 

Mandated and Voluntary Benefits

Frito Lay North America ‘s mandated benefits are health insurance and retirement benefits for its employees. The law requires that all full-time employees should be vested into retirements and health insurance program. In addition to this benefits, the company provides voluntary benefits such as reimbursement for vehicle or cellphone sue, sick and vacation leave, as well as performance appraisal. All these benefits ensure that employees are happy and devoted to work. 

Communication of Employee Benefits

Frito Lay North America do communicate its employee benefits to every employee during the hiring process. As a new employee is set to join the company, he/she is provided with detailed data comprising of the company’s pay structure and benefits. The employee then goes through the information and accepts by signing to indicate that he/she has understood the company’s terms and conditions. Upon making changes on the payment and employee benefits, the company notifies the staff through an official communication that is delivered via the email and company official memo. 

Environmental Factors

The operations of Frito Lay North America are influenced by both the internal and external environment. Examples of the company’s internal factors include performance appraisal, employee behavior, organization strategy, and the company’s ability to pay. All these factors have a significant influence on the employees’ pay structure. Notably, the company can easily control the internal factors as compared to external factors. External factors influencing Frito Lay North America’s compensation strategy include labor laws, labor unions, labor market, and the cost of living. The company has no direct control over these factors, hence it has to abide by the set conditions (“Frito-Lay – Good Fun!,” 2016). 

Compensation and Benefits Package Issues

The company cannot lower the compensation and benefits packages that it has been offering its employees.  For instance, increment in salaries makes can lead to increased cost of benefits, in cases where the benefits depend of a salary percentage (Bengtsson & Hand, 2013).  This increases the cost of operation and make it difficult for the company to withstand the compensation rate of experienced employees. 


Typically, employee benefits refer to employee stock ownership plans, health life insurance, cation, disability insurance, life insurance, retirements plan and many others. It worth noting benefits can be increasing expensive for business organizations to provide to their employees. Therefore, businesses have to structure flexible benefit plans to enhance mutual relationships with employees. compensation refers to the rewards given to employees in monetary terms or non-monetary components, for the work done.

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  1. Bengtsson, O., & Hand, J. R. (2013). Employee Compensation in Entrepreneurial Companies. Journal of Economics & Management Strategy, 22(2), 312-340. doi:10.1111/jems.12014
  2. Frito-Lay – Good Fun! (2016). Retrieved from
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