Total Compensation and Method Paper WEEK 4 TEAM PAPER
Total Compensation and Method Paper WEEK 4 TEAM PAPER
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Date Created: 11/17/15
Running head TOTAL COMPENSATION METHODS Total Compensation Methods Paper TEAM MEBER S NAMERS MGT43 1 DATE TEACHER TOTAL COMPENSATION METHODS 2 Total Compensation Methods Paper Many organizations and employees have opinions of how compensation in the company should be and what method of compensation works in comparison to another Exploring the effects of the methods will determine what compensation each organization will use Benefit programs are more popular than in past years because of the health issues today Organizations are using benefit programs to attract employees and keep good workers for longevity The employee salary benefits and compensation are strategies in the organizations recruitment of top quality employees Organization should ensure the salaries benefits and other incentives are in accordance with the employee s needs and what the competition is offering According to the Journal of Business and Psychology 2005 website which states However because of changing employee and employer needs coupled with stagnant reward systems and outdated benefit plans most compensationbenefit programs are far from optimal and almost all programs will undergo substantial redesign in the next decade Schiemann p 1 Compensation methods Compensation methods are vital assets of a strategic plan to reach maximum success Although it is not the only factor that will determine accomplishment or failure compensation works handinhand with the very people who keep the doors open every day Compensation methods are part of a chain reaction that ultimately lead to reaching goals and achieving maximum success Employees are the ones that determine the quality of work put into the organization daily along with the speed of production Employees are also behind the satisfaction of consumers and fellow coworkers How these employees feel about coming to work every day TOTAL COMPENSATION METHODS 3 will affect what they put into the organization Compensation methods can make an individual believe he or she is fairly treated respected needed and paid equally to his or her skills and creativity Pay is an important factor in satisfying employees but cannot stand alone in the foundation of pleased employees Today compensation means a lot more than just at rate Compensation must be stable and re ect the quality of employee that the shop wants representing them in the community Longnecker 2004 With each organization unique compensation methods must be used to satisfy unique needs Compensation methods such as yearly bonuses in a sales environment will lead to more motivated employees who strongly thrive to sell and provide quality customer service The employee has something to look forward to and work for Methods such as commission lead to employees who focus on making as much money as they can which improve both the organizations and their own financial standings Compensations as simple as cash rewards when achieving a set goal can impact an organization Employees will increase their knowledge to work harder reaching the goals of the organization and putting more money in their pocket Compensation methods are a way to boost productivity and make more money for organizations of every type These methods positively impact the employees who pass it along to the organization and more important consumers Benefit programs According to Susan M Heathfield nd benefits are a form of compensation paid by employers to employees over and above the amount of pay specified as a base salary or hourly TOTAL COMPENSATION METHODS 4 rate of pay Benefits para 3 Pay and benefits together make up the wage costs within an organization Typically benefits are divided into those that are required and those that are discretionary Required implies that the benefits must be provided to the employee by law For example forms of insurance health life disability sick leave vacation retirement and more All others are considered discretionary giving the organization a choice as whether to offer the benefit or not These include such things as childcare awards or bonuses pay increases education assistance and other service type incentives Employee union s play a significant role in the decision making process of benefits Companies that have unions are held to a higher set of standards that benefit the employee more than the organization Unions negotiate working terms for employee s that believe he or she has been violated by his or her organization Therefore the hiring and retaining of employees require organizations to be more competitive Because the type and level of benefits offered makes the organization attractive or unattractive to different potential employees the cost can become a tradeoff between wages and benefits for employees and the organization The choice depends on the needs of the individuals or what the organization can afford Some individuals prefer high wages whereas others prefer insurance benefits The costs of benefits are an important variable because the cost of the total benefit package needs to be consistent with the organization s ability to pay Increased cost can negatively affect the employee and organization For example a rise in benefits could cause a decrease in salary offers and salary increases Benefits provide a reason to join and maintain an employee of an TOTAL COMPENSATION METHODS 5 organization Employee s needs legal requirements unions competition and cost will all be a significant determining factor to join an organization for long or shortterm employment Salary and bene t strategies Human Resource Management strives to achieve organizational goals and the goals of employees through effective personnel programs policies and procedures Iqbal para 1 Successful performances of the personnel function can greatly increase the bottom line of any organization The way an organization develops a motivating and rewarding compensation plan is important in staying competitive keeping turn over down and morale up Good compensation packages are strong motivators for employees This is why the primary responsibility of the HR manager is to make sure that the company39s employees are paid well Every employee compensation package offers two main components The first component is the employee s salary Direct Pay or the amount they are paid The second component is benefits indirect pay or any secondary compensation such as insurance or stock options Benefits and salary are also important in helping the organization compete for good employees It is important that organizations review their compensation plans to see how it stacks up to the competitor Companies that are competitive and show that they care about their employees offer health dental and vision insurance plans They also offer some sort of retirement plan Time off in the form of vacation holidays and paid leave are also important TOTAL COMPENSATION METHODS 6 These qualities help attract the right candidates to the organization and help to establish the organizations culture Culture is a word used to describe the behaviors and norms represented in the general operation within the organizations environment By designing compensation plan that focuses on performance and growth it builds a positive culture in the organization The company s compensation plan gives insight to how a company treats their employees and shows what type of competitive environment is in the organization According to Weyerhaeusercom It focuses decisionmaking and behavior on goals including goals relating to environmental safety diversity and other social performance measures consistent with overall business strategy Reinforce a payforperformance culture through a balance of fixed and incentive pay opportunities and allows the company to attract and retain employees with the skills critical to its longterm success Compensation plans also help attract the right kind of employees because they tell about the company s philosophies values and culture For instance companies that have meritbased compensation systems such as most sales jobs are perceived to re ect a more aggressive organizational culture than those that rely on a compensation system that distributes rewards according to seniority Therefore the compensation plans that an organization strategically develops helps or repels a certain type of employee and helps and organization create a certain culture with the right workforce that represents the mission of the organization TOTAL COMPENSATION METHODS 7 Conclusion In summation organizations are using different methods of compensation to attract good workers The strategies organizations are using are employee salary benefits and incentives each is in accordance with the employee s needs and what the competition is offering These strategies are designed to achieve success produce quality products and speed of the output Organizations believe incentives and benefits entice the employee to work harder to reach individual goals which allows the organization s bottom line to benefit Different forms of benefits are required by law and others are at the employer s discretion Total compensation and the methods organizations use to provide to the employee varies Direct and indirect are two ways to categorize compensation Organizations will continue to use compensation methods to optimize the workforce As times change so will the compensation methods the organization uses to compete with other organization to win stellar employees Meaning the compensation methods will become more vital to the employee s needs in attempts for organization s success TOTAL COMPENSATION METHODS 8 Reference Heathfield S Benefits Retrieved on July 17 2010 from httphumanresourcesaboutcomodglossarybgbenefitshtm database Iqbal N nd The Effects of Compensation on Employees Work Performance Retrieved from httpezinearticlescomTheEffectsof CompensationonEmployeesWork Performanceampid242l430 Longnecker D 2004 Employee Compensation Pays Motor Age 1238 128 Retrieved from MasterFILE Premier database Schiemann W A 2005 The impact of corporate compensation and benefit policy on employee attitudes behavior and corporate profitability Retrieved from httphttpWWWspringerlinkcomcontentq178k1030967r522 Weyerhaeuser 2010 PerformanceDriven Culture Retrieved from http WWWweyerhaeusercomSustainabilityWellB eing Culture
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