Compensation and Benefit Design

Published by FT Press in January 2013, this book is available on Amazon.  It is a must-read for the HR professional interested in learning how to apply finance and accounting principles to global human resources management systems.  The author is my good friend and colleague Bashker Biswas.

Because I have known Bashker for over 40 years, I was given the honor of writing the Foreword.  In the book, he shares with us his vast knowledge and experience in total rewards program design.  

As I have written before in my blog, there is art (soft) and science (hard) to effective human resources management.  The art part is "sexier" and, as a result, more seductive.  The science part is more difficult and riskier.

I have seen larger organizations outsource compensation and benefit design to outside experts in well known consulting firms, while retaining the responsibility for its implementation.  One way people justify this choice is that the external consultant is more objective and perhaps more skilled.  As a result, most organizations have limited internal capacity to do the design work.  

The book is an antidote to this problem. It guides you through a variety of design considerations, issues, and alternatives.  It makes you more knowledgeable of a complex and demanding function.  It is also a great resource to go-to to find answer to specific issues that might hinder implementation.

A quick review of the contents follows to spur along your appetite.  You will find specific chapters on:

• Business, Financial, and HR Planning
• Projecting Base Compensation Costs
• Incentive Compensation
• Shared-Based Compensation Plans
• International and Expatriate Compensation
• Sales Compensation Accounting
• Employee Benefit Accounting
• Healthcare Benefits Cost Management
• The Accounting and Financing of Retirement Plans
• Human Resources Analytics
• Human Resource Accounting

Compensation and benefit expenses are often the largest individual line item.  Research as taught us that often it represents anywhere from 20 to 60% of gross revenue.  In the service sector the range is on the upper side. Yet most HR professionals often lack the working knowledge of how their activities can add value to the cost management process. 

In search for relevancy, HR professionals, with the aid of academics, have been playing word-games. The title in vogue for the past 10 years is business partner.  This term gives the illusion of equal footing to the HR professional in his/her interaction with line management.  Reality is that line managers are quick to recognize his/her lack of sound preparation and application of the management discipline.  Becoming fluent in compensation and benefit design, in my view, can be key to career advancement.