Compensation and Benefit
Value of compensation and benefit to the employee.
The employees take the aspect of compensation to be valued by the organization, thus increasing productivity, loyalty, and motivation. Compensation promotes employees working and performance and allows them to work longer with a company as they trust their working environment (Sudiardhita, et al., 2018). The motivation is achieved through the organization's security aspect by ensuring they feel protected by the company's compensation plan. The company's management provides the employees with a better understanding of the plan by improving their productivity and efficiency in their work; making the employees happy increases their productivity and profitability. Thus, they take the company's strategic planning and apply the plan alongside the employee’s compensation needs and interest in their working environment.
The employees place the compensation as a morale booster in the employee's working environment of the employees. Promoting workplace happiness is effective in the employee’s value proposition and promotes productivity, and enhances the organization's ability to attract prospective employees (de la Torre-Ruiz, Vidal-Salazar, & Cordón-Pozo, 2019). The employees take the company's compensation and benefits policies as they put the people in a better financial position, thus making them safe. The policy attracts people with different salaries concerning the value the policies and compensation plan places in them. Thus, the employees search for a good policy concerning their specific salaries, thus providing them the right salaries and wages. A good compensation policy attracts employees and helps retain others as they are favoured by the company's policy, making the employees take the compensation strategy as an assurance policy in good salary payment.
The employees demonstrate and exercise their loyalty to the business; they are paid well, thus staying in the company as they need and salary specifications are met. Thus, the employees take the plan as an assurance policy of remaining in the business and demonstrating loyalty to the business. Generally, a proper compensation policy will enable the employees to be retained in a business, thus promoting employee satisfaction and engagement in the workplace. The availability of benefits to the employees provides them with the ability to demonstrate loyalty to the workplace as their needs and interest are met. Policy and benefit plans like retirement, medical and nonmedical benefit are the benefits that promote the employee’s loyalty as they take it as security in their workplace. In this context, the employees whose value has been recognized are more motivated and demonstrate loyalty and higher performance than those lacking.
Factors to consider when aligning organizational strategy with compensation design.
The organization's consideration should be placed on the country's economic condition and business to identify the employees' best design. Economics is viewed as an aspect in the labor market determinate that is thus an essential aspect in the compensation understanding and the aspect of a good working environment promoting a sense of community. (Meijerink, & Keegan, 2019). The organization should consider the various groups of workers working under the organization and the needs and interests that need to be covered by the compensation plan. An organization's strategy should ensure that all the organization workers are protected concerning their economic demands and qualification. As the compensation is used as a reward to the employees, they should ensure that it does not affect its functioning and operation. The compensation plans and organization strategy differ according to the employee’s occupation in the organization and their skills levels affecting the compensation; they offer thus the organization consideration.
The government legal structure has been put in place to reduce the organization's probability of exploiting the employees based on their wages and salary and the compensation design and plans. The determination of the employee’s wage is under the control of the payment of wages act that controls the amount of money they should get as compensation (Bennedsen, et al., 2019). Despite the government policies and regulations, the aspect is also controlled by the demand and supply of the human resources in the market. In return, the organization strategy has to consider the government policies and regulations before coming up with a compensation design for the workers. The government enacted laws for the employers' laws to control the employees' compensation plan allows the employees to have the compensation according to their level of qualification and level of education.
The organization's demand and supply require the human resources in the organization to determine the compensation design. The high number of employees at a certain level does not determine the wages level as the same is controlled by the job market and the government policy that protects the employees. Considering the demand and supply of the human resource in the market, the organization determines the design for the employees' compensation regarding the probability of losing employees and an ability to attract new ones. If low in the market predicts that an organization's compensation design by the organization should be high as the organization strives to maintain the employee they have in place. Thus, the compensation design is determined by the availability of human resources in the market, thus compensating its employees.
Global implications when considering a compensation design.
Before the globalization of the compensation design, the organization should first deal with the organization's staffing and the development of the local pay practice and the business philosophy. The strategy development t has to be tested against a business strategy used in more than one nation in the market to prove its practicability. The strengths and weaknesses are outlined in the test to enable the design to pass to development areas. The design should also have areas where additional development is to be made as it should allow the compensation to be flexible in relation to the situation at hand and an explanation of how the philosophies created are to affect future development in the design. The compensation design to pass the test and become a global one should include all the rewards and the cash component and the incentives to be achieved in the long run.
The making of the strategies global in the compensation design, pay strategies considerations should be made for the dollar's fluctuation and inflation. For the companies in the united states making payments to overseas companies, their effects are felt as they make payments with the strong dollar effect, thus reducing the compensation cost (Tsai, 2020). The dollar's fluctuation affects the employees worldwide as the dollar affects payment to the other companies oversee. They do so by reducing the compensation affecting companies in those countries where the US dollar makes a long-term investment. The compensation design should ensure that global rewards are adjusted to overcome the dollar's effect to stabilize the situation. The review will enable the design to deal with the effect if the opposite happens where the dollar is affected.
The consideration of the benchmarking pay affects the company’s compensation design as it affects both the local and the global as its greatly influenced by the pay practices from both ends. Maintaining the pay equity and doing the compensation worldwide can be achieved by exchanging the local to the global pay practices (Siddiqi, & Kol, 2021). The effect is also present when countries are doing payment amongst themselves where the exchange affects them, thus creating inequality in the pay concerning the country making payment. The aspect of equality is only made possible at the local market where the geographical location favours the compensation made cash by the executives, and the payment made at the local level. Most payments made at the global level are affected because the global pay is complicated and harmonizing the pay with the local pay is complex, causing the practice to be costly.
Values employees have for different components of compensation and benefits plans.
Salaries and wages form the largest component of the compensation plan for the workers. It is determined by the personal skills and education that determine the responsibility and role one plays in an organization. The bigger the role and education, the higher the salary one is accrued to, but the changes are made concerning the employees’ value and performance level that determines their contribution to the company resources. The salaries are followed by bonuses given to the employee as an incentive for their hard work. The bonuses are paid annually, and the sharing is done regarding the company dividend and profit-sharing plan, but the same is done concerning individual performance. The federal pay requirement is paid to the employee as a federal law request to protect the workers through overtime pay. The payment is made according to the hours the employees work overtime, but the overtime is associated with employees who work for more than forty hours as it is measured in weeks and not in days.
Other compensations include miscellaneous compensation, which includes minor things like assistance to the employees, time off; this is when the employees are off from their duties; they include vacations to the employees, sick days, and other days off duty. Sometimes the compensation plan may apply as an insurance policy to the employee by the employer. The plan is considered helpful if the employee gets it from the employer as the policy is less costly to the employee. Retirement is a plan that is easy to offer, and because it’s considered cheaper because the employers offer the plan once after retirement. The other plans are considered expensive because they involve payment after every achievement, thus expensive and costly.
The company is fighting to keep the compensation plan to enhance the advantages through the years instead of sharing annually. This plan will increase the number of benefits and the organization's budget meaning more benefits will be reaped in the coming year. In the reword section, some organizations are increasing the organization's number of rewards to ensure that the organization's expectation is met through the employee's encouragement through the compensation plan. The plans bring about different groups in the organization, enhancing the performance of the organization. In the compensation plan, the education program's incorporation helps the employees gain education advancement through the program.
References.
Bennedsen, M., Simintzi, E., Tsoutsoura, M., & Wolfenzon, D. (2019). Do firms respond to gender pay gap transparency? (No. w25435). National Bureau of Economic Research.
de la Torre-Ruiz, J. M., Vidal-Salazar, M. D., & Cordón-Pozo, E. (2019). Employees are satisfied with their benefits, but so what? The consequences of benefit satisfaction on employees’ organizational commitment and turnover intentions. The International Journal of Human Resource Management, 30(13), 2097-2120.
Meijerink, J., & Keegan, A. (2019). Conceptualizing human resource management in the gig economy. Journal of managerial psychology.
Siddiqi, K., & Kol, E. (2021). Benchmarking Project Manager’s Compensation. In Collaboration and Integration in Construction, Engineering, Management and Technology (pp. 95-100). Springer, Cham.
Sudiardhita, K. I., Mukhtar, S., Hartono, B., Sariwulan, T., & Nikensari, S. I. (2018). The effect of compensation, motivation of employee and work satisfaction to employee performance Pt. Bank Xyz (Persero) Tbk. Academy of Strategic Management Journal, 17(4), 1-14.
Tsai, I. C. (2020). Alternative explanation of the money illusion: The effect of unexpected low inflation. International Review of Economics & Finance, 69, 110-123.
