CPFO Compensation & Benefits Practice Exam

A compensation strategy that includes competitive salaries along with benefits and rewards is effective in retaining top talent because it takes a holistic approach to employee compensation. This means that in addition to providing a competitive base salary, the organization also recognizes the importance of benefits such as health insurance, retirement plans, and paid time off, as well as performance-based rewards like bonuses and recognition programs.

Top talent often seeks not just financial compensation but also a benefits package that supports their overall well-being and incentivizes their contributions to the organization. By offering a combination of salary and additional rewards, the organization signals that it values its employees and is willing to invest in their long-term satisfaction and growth. This approach fosters loyalty and engagement, increasing the likelihood that top performers will remain with the company.

A focus solely on base salary increases, for instance, may not address other critical factors that contribute to job satisfaction, such as work-life balance and recognition. Consequently, without a comprehensive benefits and rewards strategy, organizations may find it challenging to keep their top talent engaged and committed.