Compensation Plan Outline

  • Uncategorized

CompensationPlan Outline

Theword compensation stands for salaries, benefits, and wages awarded toemployees for their work. It may entail hourly or annual salary, plusadditional incentives, benefits, and bonus payments like health carecoverage, retirement savings, and disability insurance. Therefore,the overall compensation package contains several elements such ashourly wage, annual salary, retirement savings, group health, andbonuses, raises, and incentives (Miller, 2012).

GroupHealth Benefits

Anentire compensation plan involves group health-care benefits. Variousfirms pay a considerable share of the whole monthly premium. Theyalso leave some portion to be deducted from the worker’s pay. Thepayments for employer-funded health care plans are subtracted fromtheir pre-tax income. Group health can also cover vision and dentalaspects. Other employers offer short or long term disabilityinsurance (Miller, 2012).


Workerscategorized as non-exempt obtain what is termed as wages. Thepayments are normally calculated on an hourly basis. Each employeeshould work for 40 hours in a week. Any extra hour is compensatedaccordingly, as established by the employees` act. In most cases,overtime is calculated in one and half times the normal pay. Thelabor union contract is used as the bargaining tool between the topmanagement and the employees.


Ifemployees donate 5% of their gross wages and the organizationcompensates 50% of the worker’s contributions. The amount variesaccording to the number of times or years the employee hascontributed.

Raises,Bonuses, and Incentives

Performanceentirely drives this section. Employees receive raises in salary thatis determined by performance ratings and ranking. For instance, anastounding performance can be compensated via a pay rise.Organizations also include some additional incentives to boost theemployee morale.


Thisrefers to the amount of pay an employee receives on a yearly basis.The employees are salaried in an annual basis depending on theexemption credentials (Mayhew, 2016).

Theabove facets are included in most compensation plans, though withvarying degrees. The hourly and annual range may be constant, butaspects such as bonuses tend to fluctuate depending on performance. Agood example is the sales and marketing field. The workers are paid acommission for each item or service they sell. The commission variesdepending on the value and agreement with the employers. Thisparticular paper will look to assess Google’s compensation plan.Google is the leading search engine in the entire globe. In thatregard, it ought to have an enticing compensation plan to keep itsemployee motivated.

Googleis an American global technology corporation that specializes inInternet-related products and services. They include cloud computing,software, search, and online advertising. Google’s compensationpolicy is very competitive as compared to their rivals. Thecorporation accords high wages encompassed with comprehensiveunconventional benefits and incentives. They provide both moral andfinancial incentives. Additionally, the corporation offers benefitssuch as retirement pensions, free utilization of the exerciseequipment, free meals, and medical insurance. Convincingly, Google’shuman resource management is effective regarding the compensationpolicy since it attracts qualified staff. As a matter of fact, Googleis perceived to be among the best companies to work for. Google’ssalary scale is based on the scope of work. A software engineer earnsbetween $80,747 and $142,734. Senior software engineers make between$102,138 and $188,762. The technical program managers receive a payof $93,852 to $163,144. Software developers are paid between $56,247and $137,586. The product software managers earn between $69,408 and$174,505. Program Managers, IT earn from $96,800 to $141,925. Thebusiness development manager earns between $68,935 and $167,316. Thenthe salary varies depending on experience. Google manages to blendthe salaries with the respective tasks efficiently.

Utilizingexperience and the scope of work is the most convenient way ofstructuring the employees’ wages. Additional incentives come fromcommissions and performance. The compensation plan is fair to allworkers. In other words, the more the skills, the better thecompensation.


Thecompany provides its workers with several benefits to ensure theyremain loyal. Some of them include:

  • Free food, i.e. the company has more than 11 gourmet cafeterias. Their rule that employees should not be more than 100ft from any source of food works well. This capability improves employee morale.

  • The company has several on-site childcare amenities that favor parents who work in the company

  • Google also allows employees to come to work with their pets. It is a major plus, especially since most of its competitors do not allow the same.

  • Environmentalism is another key sector championed by Google. With the growing environmental concerns, the company is on the forefront championing preservation measures.

  • The 20 percent Creative Time Program is another key benefit to the employees. It allows the creative team to spend 20 percent of their work time on their projects. In other words, they are given the chance to work on projects that interest them. This benefit makes the workers enjoy their tasks. Business opportunities are also heightened in the process. Google News, AdSense, Orkut, and Gmail are some of the services that have emanated from this benefit.

  • Transportation services are also easily available for the employees. The company operates Wi-Fi enabled shuttles over several cities.

  • The company also has sports amenities as well as laundry services that benefit their employees.

Asentailed above, the company has several benefits that heightenemployee loyalty. Apart from getting considerable amounts of pay, theworkers perform their tasks under conducive environments (Matulich,2011).


Thecompany also regularly assesses the compensation, performance, andpromotion to ensure the wage gap is as slender as possible. Sincetheir performance pays them, the workers are highly motivated toundertake their duties. However, the company could benefit even morewith an additional feature of their compensation structure. Forexample, they could adopt a mechanism where employees are regarded aspartners. In other words, they would be offered opportunities to beshareholders of the company. A company like Starbucks gives theemployees priority to acquire company shares. In that regard, theyshare the company’s profits. It is one of the best of the mechanismof heightening employee motivation. A motivated worker increases theproductivity levels since they know the more the profits, the greaterthe benefits (Starbuck, 2004).

Morecan also be done to ensure equity of salaries. In other words, insome instances workers are paid differently even though they work inthe same department with the same qualifications. Transparency canachieve this in the compensation docket. It should be clear howcompensation is accorded to the different workers. It is not alwaysan easy task, but Google’s compensation plan can be improvedthrough heightened transparency.

Employer-SponsoredRetirement Plans

Googlehas one of the best performing 401k plans. In fact, the program keepson improving on an annual basis. By the end of 2014, the company hadroughly $4.8 billion in assets. It is a considerable rise given thatit had less than $1 billion by 2009. The participants have championedthe contributions. For instance, the members made a contribution ofmore than $560 million, and the company added over $250 million. Thecontribution plan thus hit an astounding $950 million. The totalbenefits acquired from the program has risen from $24 million in 2009to $100 million in 2014. The net cash flow is, therefore, nearing $1billion annually more than any of its competitors.

Theplan allows participants to enroll automatically at 10 percent of theeligible compensation unless they chose otherwise. Google sets theautomatic enrollment rates just above the 3 percent deferral rate. Inaddition to that, setting the eligible rate at 10 percent encouragesthe participants to save a considerable amount of income to be readyfor their retirement. Apart from automatic enrollment, the companyprovides an employer matching aid. In 2013 and 2014, Google matchedover 100 percent of a member’s contribution of $3,000 or 50 percentup to $8,750. This replicates to roughly $4,250 from Google regardingretirement savings. Workers are 100 percent vested in thecontributions and therefore have no threat of losing employer matchin case they do not stay with the firm. Apple’s rate lies at 6%match of entitled worker’s pay. Amazon’s is roughly percent,Oracle 6 percent and Facebook around 7 percent (BrightScope, 2015).

HealthInsurance Programs

Googlehas a comprehensive health insurance for its employees. Apart fromthat, it has on-site nurses and doctors. They offer 100 percentmedical cover to all its workers as well as their families. Travelevacuation insurance is also offered as a portion of the healthbenefits package. For instance, if an employee falls sick whiletraveling, the cover ensures he/she is transported to the medicalfacility and home to recover. Its comprehensive health insuranceincorporates travel medical and emergency evacuation. It limits thenumber of sick days since one is transported to receive care withease. The comprehensive cover has numerous options that are offeredat lower premiums. Competitors such as Facebook also havewell-established health insurance cover for their employees.


Devisingan effective compensation plan can be quite intricate for anycompany. It becomes hard for organizations to attain equity when itcomes to allocation of wages. Some companies do not achieve the rightbalance, and this can result to wrangles. However, Google has managedto balance its compensation plan to favor all its employees. Forinstance, the workers are paid according to their duties and skills.The company also has numerous benefits that motivate the workforce.Some of the benefits include free food, creative time program, andtransportation services among. It also has stable retirement benefitplans as well as health insurance programs that impact positively onits workforce. As described above, the company continues to be aleader regarding employee care. However, more can be done to heightenproductivity. One of the mechanisms will be to involve the employeesas partners or shareholders to enjoy the company’s profits. Such atechnique would motivate the workers to perform their duties evenbetter.


BrightScope. (2015). Google Sets Employees Up for Successful Retirement.

Matulich, R. K. (2011). Google: searching for value. Journal of Case Research in Business and Economics, 1-10.

Mayhew, R. (2016). Example of an Employee Compensation Plan.

Miller, M. S. (2012). A Guide for New Clerks and Secretaries of Governing Bodies of Higher Education Institutions in the UK. Leadership Foundation for Higher Education.

Starbuck. (2004). Living Our Value: Corporate Social Responsibility.

United States Department of Labor. (2012). An Employee`s Guide to Health Benefits.

Close Menu