Everyone aways needs to be careful in choosing compensation: both those who offer it and those who accept such a deal. It's rather like old Leo Tolstoy's note in Anna Karenina, there are so many ways in which such a relationship can go wrong that each one that goes right does so in its own way. Odd perhaps to compare an employment relationship with a marriage but it is apt at times.



The thing about compensation packages is that first and foremost they have to be clear. There should be no grey areas in which opinions, sometimes fraught around the time of the annual evaluation period, can come into play. Bonuses, if there are going to be any, should be worked out on a clear basis well known in advance. But that sort of bickering in a modern company is less important (for those sorts of issues are rarer) than that of the overall make up of the compensation.

It is well known from the company side (after all, they do employ all the accountants) that it is the total cost of employment that is important. With taxes like National Insurance, income tax etc on what is paid directly to employees and with certain non-cash compensation not subject to them, it can be possible to increase the compensation received without increasing the cost of it. The loser in that little game being the tax man (shame, we know).

However, from the other side of the desk, from the employee's side, while those non-cash benefits can be desired (private health care, company car etc) they can also have significant tax implications for the employee (that car as the largest example). There is also the point that most economists would want to make: that people in fact value many non-cash transfers at less than the cash that isn't being transferred. For example, a company might offer free private health care to all employees: some will value this more than the (after tax) money they could have received instead, others less.

What this means is that for everyone involved in creating compensation packages it is necessary to get the experts involved: those at Talisman for example. There will be certain parts of a compensation package that are, in a certain industry or at a certain level are simply regarded as normal (a car in the automobile industry for example, a mortgage when working for a bank), some that are highly desirable in that they are sought after but not generally offered and then that last group, those that are perhaps gilding the lily: quite possibly costing more to provide than the perceived value of them when received.