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Reply #9: Yes, definitely. And having worked closely with HR on wage and [View All]

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johnaries Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jan-09-10 06:32 PM
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9. Yes, definitely. And having worked closely with HR on wage and
salary issues I can explain it very simply.

Employee wage and compensation is the largest single expense for all but a handful of companies. Therefore, employers want to make sure they hire quality employees to get the most productivity or "bang for their buck" as it is often called. Further, employee retention is very important because the process of hiring and training is very expensive with no return value until the training is completed.

Every company is competing with every other company for many of the same employees. To effectively compete, HR departments have to track the employee market and what other companies are paying and what benefit packages they are offering. Most "quality" employees seeking long-term employment are looking for a good benefits package as well as good wages.

Like everything else, employee compensation has to be budgeted. If the benefits cost less, then there is more in the budget for wages. In order to compete with other companies in attracting potential employees, with benefits being more or less equal the company will increase wage offerings. Other companies will increase their wage offerings in turn to compete.

Unfortunately, these wage increases usually begin with new hires rather than existing employees. But, as other companies "woo" existing employees away with the increased wage offerings the company will then increase existing wages in order to maintain employee retention.

Therefore, yes, lowering the costs of benefits definitely results in increased wages.
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