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Benefits And Compensation Issues Business Essay

What are your benefits is the first thing many applicants ask. Benefits - indirect financial and nonfinancial payments employees receive for continuing their employment with the company - are an important part of just about everyone's compensation. They include things like health and life insurance, pensions, time off with pay, and child-care assistance. Most full-time employees in the United States receive benefits. Virtually all employers offer some health insurance coverage. Employee benefits account for between 33% - 40% of wages and salaries (or about 28% of total payrolls). Pay for time not worked is the most costly benefits, because of the large amount of time off employees.

Compensation is a primary motivator for employees. People look for jobs that not only suit their creativity and talents, but compensate them-both in terms of salary and other benefits-accordingly. Compensation is also one of the fastest changing fields in Human Resources, as companies continue to investigate various ways of rewarding employees for performance.

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When setting the level of an employee's monetary compensation, several factors must be considered. First and foremost, wages must be set high enough to motivate and attract good employees. They must also be equitable-that is, the wage must accurately reflect the value of the labor performed. In order to determine salaries or wages that are both equitable for employees and sustainable for companies, businesses must first make certain that they understand the responsibilities and requirements of the position under review. The next step is to review prevailing rates and classifications for similar jobs. This process requires research of the competitive rate for a particular job within a given geographical area. Wage surveys can be helpful in defining wage and salary structures, but these should be undertaken by a professional (when possible) to achieve the most accurate results. In addition, professional wage surveys can sometimes be found through local employment bureaus or in the pages of trade publications. Job analysis not only helps to set wages and salaries, but ties into several other Human Resource functions such as hiring, training, and performance appraisal. As the job is defined, a wage can be determined and the needs for hiring and training can be evaluated. The evaluation criteria for performance appraisal can also be constructed as the specific responsibilities of a position are defined. Other factors to consider when settling on a salary for a position include Availability of people capable of fulfilling the obligations and responsibilities of the job, Level of demand elsewhere in the community and/or industry for prospective employees, Cost of living in the area, Attractiveness of the community in which the company operates, Compensation levels already in existence elsewhere in the company.





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Today's competitive business environment is forcing companies to rethink how to attract and retain top talent without sacrificing business goals. Employee compensation and benefits are an employer's primary tools to attract and retain talented employees, but they are facing more scrutiny now than ever. Plan fiduciaries are under increased pressure to adhere to rigid standards in light of recent corporate scandals. Waves of employee benefits legislation and regulation threaten to swamp employee benefit plan administration.

Many companies are faced with unmotivated employees whose poor attitude can greatly affect the growth of the company. By introducing incentives, companies can boost employee morale tremendously. A few examples of employee incentives are paid vacations, company sponsored social activities, stock options, and bonuses or pay increases based on performance. These are just a few activities that can lead to a more productive work environment. HR is usually faced with suggestions but is unable to put them into company policy.

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The most challenge Human Resources department facing is employee's turnover. Meeting the demands of today's changing business environment requires building and retaining a loyal and motivated staff. Therefore, finding and keeping quality employees so as to reducing turnover is one of the key challenges of HR department. Employees who feel they're underpaid will also feel they're undervalued and are more open to potential offers from outside firms. To a firm, the effects of turnover can be costly. The time and money it takes to recruit, rehire and retain can quickly cut into a firm's bottom line. Besides the costs, especially for the high-technology companies, employees' turnover means high risks of losing its important technologies and clients.

To develop a loyal, motivated workforce and keeping turnover at a minimum, the first step is finding and hiring good people. Therefore, It's crucial to have a recruiting strategy in place. Secondly, it certainly takes more than money alone to attract and retain skilled professionals, it's helpful to offer competitive compensation packages, for example: to be flexible and tailor compensation to individual employees; pay a little more than prevailing salaries at other firms; acknowledge your employees' contributions as frequently as possible; offer staff members opportunity and reward them when they succeed. Thirdly, creating an employee-friendly work environment also play a role. The implication is clear: The more enriching your work environment, the more likely you are to retain a staff of satisfied, productive employees.

The single most challenging issue facing HR executives today is the benefits package a company offers to its employees. Such benefits as retirement plans, healthcare, family leave plans and vacation time are becoming increasingly important to employees. However, such benefits are costing companies a tremendous amount of money each year and it's on the rise. Human Resource executives must find a middle ground that will not only please its employees, but also be affordable to the company.

The most challenging HR issue facing companies today is the ability to offer a competitive incentive package. Employees today want to work for a company that offers reasonable salaries, excellent health benefits, a pension plan and comprehensive 401k plans. Not to mention tuition reimbursement, child care centers, fitness centers, life insurance, and the all-important paid time off. Each of these perks is very costly to the company, but without them the quality of their workforce would be sacrificed. Companies seem to be adding more benefits to attract and retain employees, but with the increases in the cost of these benefits who know how long they will last. HR executives need to understand their company and be able to offer as many benefits as possible without hurting the profitability of the company.

If you own your own business, your employee compensation and benefits package can be the deciding factor for many potential employees. And it's not just the money. To make your company competitive and attractive to job candidates, you have to offer an exceptional total benefits package. That makes it a very important part of your business planning and management process if you hope to hire (and keep) top employees.

Of all the disciplines in the human resources field, compensation is one of the most complex. Handling compensation issues requires knowledge of employment trends, the value of experience and credentials for various positions and industries, negotiation skills, company budget and the organization's bottom line. Economic conditions also play an important role in compensation and benefits issues. Addressing compensation issues can range from developing competitive wage scales to weighing the advantage of bonus and incentive payments.

The term compensation means financial payments such as wages and salary paid to employees. Compensation also includes bonus and incentive payments, raises and company stock awarded to employees. Compensation specialists often have knowledge of both compensation and employee benefits. This is one reason why human resources departments sometimes combine compensation and benefits into one departmental function.

HR's efforts to integrate compensation strategies and practices are a key component of successful mergers and acquisitions. In today's whirlwind of mergers and acquisitions (M&As), everyday HR issues such as employee compensation may get blown aside as countless financial and legal priorities take center stage. However, recent research suggests that HR could play a greater role in successful M&As, and, the earlier HR gets involved, the better.

Depending on the circumstances of the deal-and the compensation policies of the merging companies-HR may be called on to splice disparate payment plans into a program that fits the new organization, or HR may have to discard the original plans and then create a program from scratch that complements the merged entities. Either way, old and new employees will be concerned about what is happening with their pay, so HR also must develop an effective communications plan to inform and reassure them.

Compensation represents the largest of all expenses in most organizations, and it is in turmoil. The Federal government's statements are inconsistent and have resulted in much uncertainty. Executive Compensation is a global issue, including who is an executive, CERP implications, and long and short-term incentives. While some employers are reducing hiring and merit budgets, freezing salaries, decreasing bonuses and pay, passing on of benefit costs, and - gasp - cutting out 401k contributions - they should also remain concerned about holding on to their most talented employees when the economy recovers. With decreasing revenues, sales compensation structures are being revised, such as the trend away from a revenue basis to a profit basis. Then there are the changes in 401(k) and other plans Companies are cutting their match, and the IRS is providing guidance.

It is the biggest pain of Compensation and Benefits - how to introduce the fair and transparent compensation policy to the organization. In the public sector, this issue is quite easy to solve as their compensation scheme are pretty rigid and people get used to them. But in the large corporations - the transparency and fairness of the compensation policy can be a real issue to the employees.

The organizations usually know what it means to have a fair and transparent compensation policy. But the pressure of the business and the constant need to change makes almost impossible to make the compensation policy transparent and fair to all the employees. It needs a lot of time and effort.

Fair Compensation Policy needs a clear definition of job descriptions and job profiles in the organization. The value of each job must be evaluated and the organization must develop a clear system of jobs within the organization. In this stage the HRM is under a big pressure as the managers know about the impact of the job evaluation to the real salaries and bonuses. The whole system must be clearly supported by the Top Management of the company. When the organization has a clear system of job evaluation and all the job positions are put in the correct order, the organization can develop the Fair Compensation Policy. The fair compensation policy takes the following inputs, job, evaluation, job market situation, business strategy, preferences of the organization.

Based on the inputs the HRM can prepare the fair compensation policy, which enables the company to reach better performance. The HRM is responsible for the correct setting and keeping the rules during the procedure of creation of the fair compensation policy. The fair compensation policy means the fair value of each job in the organization and clear process of reaching this fair value.

Transparent Compensation Policy is about opening the rules for the compensation policy to employees. When the employees have a chance to understand the principles of the compensation policy and they can take them as fair to them, you are successful in the implementation of the Transparent Compensation Policy. The Transparent Compensation Policy is about the courage to open the rules and the compensation policy must be ready to be open. In case, the compensation policy is not fully implemented and the employees are not fully in the compensation range, it is very dangerous to make compensation policy transparent.

Honestly, these basic rules about the Fair and Transparent Compensation Policy are easy to write, but very hard to follow in the real business life. But every HRM should implement Fair and Transparent Compensation Policy to support the performance of the business and to increase satisfaction of employees.

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