Compensation is key to identifying as well as rewarding your employees, for their exceptional performance and contributions to the company’s success rate overall. Due to compensation being a significant factor, you must carefully evaluate the three strategies that will be presented in this report. Incorporating a bonus structure is a widely accepted compensation strategy. It provides for an employee who receive a set salary to capitalize their earnings by being rewarded for excellent job performance. Implementing a bonus structure could result in a stable compensation strategy that most employers and all employees are comfortable with.
The downside of using this strategy would be having to minimize the ability for growth in annual salary increases, which could result in moral, motivation and productivity decreases. Offering a tuition reimbursement plan is also another popular and well accepted compensation strategy. With this strategy, employees feel as if the company that they invest a minimum of 2080 hours per year cares enough about them to help them pay for a higher education degree. There are many individuals who come to work and give their all with a desire to better themselves. However, due to financial restraints they are unable to.
With the implementation of such strategy, you will begin to notice more and more employees pursuing higher education. This overall provides an excellent look for your company to have degreed professionals employed by you. Lastly, to offer a competitive benefit plan (health, dental, vision, etc. ) has been known to be the deal breaker for many Americans of the working class. With the various legal regulations recently passed offering such benefits are becoming mandatory however, there are additional factors to consider when choosing these benefits that will also let your employees know you care bout their health and well-being.
Competitive Employee Benefits will definitely add a layer of motivation to all employees to exceed all goals and continue their employment career with the company. Introduction Compensation in the 20th century has become the background battleground between employers and employees. The research findings in this report will analyze 3 different compensation strategies that can be implemented to settle the unspoken dispute in the workplace as well as improve the company’s workplace performance due to workers’ feeling fairly compensated.
Everyone seeks to be rewarded for performance, attendance ND quality of work. Implementing a Bonus Plan, offering tuition reimbursement or a competitive employee benefit package are 3 of the most widely accepted compensation strategies. This report will aid you through the decision making process making it easier to choose the best option for your company’s needs. Planning, administering and implementing compensation strategies can prove to be extremely challenging. There are several key notions, pertinent laws and commonly used terms are included during the developmental phases.
To implement the best possible compensation related decision, it is essential to understand the characteristics and effects of current pay/ compensation structure that is already being utilized at your company. The three options presented are known to be implemented under a traditional compensation structure which includes: Base Pay Commissions Overtime Pay Bonuses, Profit Sharing, Merit Pay Stock Options Travel/Meal/Housing Allowance/Tuition Reimbursement Benefits including: dental, insurance, medical, vacation, leaves, retirement and taxes Please note, the traditional compensation structure is the most commonly used.
Now let’s explore only 3 of strategies mentioned above to ring balance to the compensation strategy within the company; bonuses, tuition reimbursement and employee benefits. Research Findings Implementing a Bonus Structure Rewarding employees with bonuses for a job well done is one of the more popular ways of streamlining the payroll budget. As an employer you tie several stipulations to the employees’ job duties for them to obtain in order to receive the bonus.
Bonus structures are no longer as popular as they were during the boom years, however, some employers still employ the idea and the performance of their employees proves that it still works. Although bonus plans have begun to disappear, the increased performance of individual employees through the rewarding of set goals has allowed bonus structures to withstand the test of time in the workplace. A structured bonus plan is a great way of rewarding those employees that are producers without killing a company’s budget.
Implementing a sound bonus plan is a great way to encourage performance as long as the employee’s goals are attainable. Be careful however because a simple bonus plan to motivate employee’s performance can also be denominating due to employee’s inability to attain he set goal. Implementing a ratio significantly outside of what is normal for the industry and type of position could have a negative impact on recruitment and retention. Next, the behaviors and measurable performance results that are key to the success of the organization must be determined.
Finally, value has to then be assigned to various levels of contribution/results in order to create a formula for calculating incentive awards that is clear and understandable to employees (VIRTUAL HER DEPARTMENT – COMPENSATION AND BENEFITS: BONUS PLANS, 2014). Effective bonus plans can be positive o a company in several ways. An effective bonus plan can attract and motivate employees. If employees feel or are made to believe that the goal is attainable, then one can expect to see an increase in performance over time. Bonuses also allow business to pay employees without committing to any type of pay increase (Bowers, 2003).
In a job market where corporations and small business are looking to pay little for good work, a bonus plan would be a great way to do so. Employees generally would begin to show more initiative in finding projects to do. They may also be more inclined to meet company deadlines. There are several different bonus structures that can be implemented such as: Current Profit and Sharing – the company set aside a predetermined amount and depending on the profitability of the company bonuses are given across the board. Gain Sharing – This type of bonus is most commonly used in a manufacturing setting, rewarding productivity and improved quality.
Spot Bonus awards -? these are bonuses given just for being helpful, usually distributed by lower management and is tax free Noncoms Bonus – these are bonuses such as employee of the month parking, an award given during a special ceremony time in front of the entire many. Sign-On Bonus -? this bonus is given mainly for two purposes: to establish goodwill and to buy out any competition. Mission Bonus – given when employees establish a milestone in their career Referral Bonus – this bonus is given to employees for referring qualified personnel.
Retention Bonus – If a company faces a merger or acquisition this is the bonus given to help encourage employees to remain with the company. Holiday Bonus -? a small gift from the employer to celebrate the upcoming holiday season. Sales Commission – this type of bonus rewards salespeople for selling the company’s product. Deed, 2014) Analysis: Your company’s incentive plan needs to be competitive with other companies otherwise implementing such will be pointless, recruiting becomes difficult as well as the retention of employees.
Next, with having over 1 00 employees at various salaries you must make sure to assign different bonus values to each salary level. This shows employees equality and fairness amongst their equals. It will also show your willingness as their employer reward those that exceed expectations. Bonus programs generally pay out annually but due to this being a new incentive within your company it ill be a good idea to incorporate a monthly bonus structures. This will show your employees how serious you are about appreciating their performance. Tuition Reimbursement Tuition reimbursement is becoming more accepted by employers today.
Many employers realize that to employ degreed professionals comes with a number of benefits. Many individuals who have obtained a degree of higher education show a much more substantial amount of stability, maturity, productivity and initiative. However, with the fluctuation in the economy many working Americans find it difficult to obtain a degree while working a 40 hour work week. With little to no motivation or support the working class is settling for jobs that they are over qualified for because they don’t meet the stipulations to obtain those that they do.
To offer a tuition reimbursement plan it is the employers’ way of saying we believe in you, we support you and we will aid you in the advancement in your career. What is a tuition reimbursement plan? Tuition reimbursement is an agreement that the employer agrees to finance all or a substantial portion of a current employee’s post-secondary education (Jensen, 2014). In offering this type of comprehensive compensation strategy it can moieties be an extremely difficult decision in deciding whether or not to offer such program and how to structure it.
It is obviously that not only do the employers benefit from having degreed professionals but their employees will also immensely benefit from having either reduced or a completely eliminated tuition bill. This could be quickly become expensive at a rapid rate, so how do you eliminate the possibly of paying for those who are just there to take advantage Of the generosity of the company? You can break down the eligibility requirements into the following two categories: Star Talent – This loud be your group of most productive employees.
You may consider extending tuition reimbursement to this group of performers as it may be the determining factor on staying with your company or going with a more favorable job offer. Employee Loyalty – The employees to fall under this category would be those whose performance is not as consistent as those who have Star Talent, however, their loyalty and dedication to the company is impeccable. They have the best attendance rates and through company transition they remain with little to no complaint. You know for a fact that in offering these employees tuition reimbursement they will remain with the company for years on end Nonsense, 2014).
If the applying employee does not fit into one of the categories listed above you may consider explaining to them who the program is tailored for in hopes that within a given period they adjust to fit within either category. If they chose not to then you know that not offering them the assistance was a great business decision for your company. With these employees it is possible that your staffing needs may increase, offering tuition reimbursement is a great recruitment tool. It also instills loyalty in those new employees, knowing that you are equally invested in their career and higher education as they are (J.
E. Coronet,Demand Media, 2014). Analysis Unwittingly, having a staff of over 100 you want a knowledgeable staff, what better way to create a workforce full of industry experts than to prod cue them yourself? Over the years it has been proven that employees with post- secondary degrees make the most competent and productive employees (Jensen, 2014). With offering comprehensive tuition reimbursement compensation strategies you may very well present your staff with an abundance of educational opportunities that would not otherwise be an available option for them.
Remember, with a company of our size offering tuition reimbursement can become costly quick. This could easily become the most expensive compensation strategy of the three offered. Although, it would be an amazing compensation strategy you don’t want to go bankruptcy trying to appease your employees. Ultimately they would rather have a consistent paycheck than incentives that could hinder the success of the company. However, it is definitely something that should be considered as it loud catapult your company to the next level in relations to employee compensation.
Benefit Packages Over the years the cost of healthcare and various wellness programs have increased astronomically. As the cost Of healthcare rise, it appears as if the health of working America is rapidly decreasing due to stress, anxiety, divorce, post-part, etc. Without available healthcare options the condition of working America is only worsening. Being a business owner, offering a competitive benefit package (health, dental, vision, etc. ) is a major responsibility. You must consider a number of factors before making the session to do so.
Take time to examine the following: Your employees, your company vision/mission/objectives, the industry your company is a part of as well as the overall marketplace (Tortes, 2014). As am employer looking to launch a new benefit and wellness plan one of the primary functional components is to use such as an attraction and retention tool. The all-around truth is that when looking to launch this level of employee compensation you must be realistic in knowing that the cost of healthcare is not going to decrease in the future as far as it can be foreseen.
The inevitable part about his truth as less companies participate, it could force insurance carriers to continue release higher rates on a consistent bases with each passing quarter. As an employer to proactively encourage the participation from your employees in the benefit and wellness programs, you aid in helping them become better prepared and protected against accident or illness that could if not insured result in significant financial repercussions for themselves as well as you as their employer (Giddiness, 2012).
Without access to healthcare professionals and wellness programs employees will be off work more due to illnesses that cannot be treated by a medical professional, stress that they will not know how to control without the right guidance. With employees missing work this will affect productivity as well as the companies’ quality. Many employers do not understand how benefit and wellness programs go hand and hand with one another. The truth is having a wellness program will actually help cut the cost of healthcare benefits.
Wellness programs offers the following benefit for employees: Improved physical fitness and overall quality of life Weight reduction and management Smoking cessation Reduced levels or elimination of stress Higher self-esteem and confidence Better nutrition and eating habits Overall healthier lifestyle Wellness programs benefits for you the employer: Reduced healthcare cost over the course of time as more employees take advantage of the wellness program Increased employee prod activity Higher employee morale Improved employee retention and recruitment Reduced absenteeism (Morley, n. . ) Analysis: Healthcare and Wellness programs are the most commonly sought compensation strategies in addition to salaries that employees will receive. Keep in mind that there are many ways to evaluate the correction plan of action for your company. To offer these compensation strategies it can still be difficult as most healthcare plans are not paid for by the employer at 100% and depending on the level of the employer contribution it can be extremely difficult to gain employee participation especially if their salaries cannot support the additional deductions.
Employee participation affects the rates of the insurance. In consideration of employee premiums to make it fair across the board for all employees with different salary levels, you should contribute differently based on their pay grade, the lower the salary the more you the employer contributes to assist in ensuring your employee has the healthcare coverage they need while still being able to cover their cost of living expenses. Recommendations Recommendations: My first recommendation is that the company first take the time to implement a competitive benefit package.
This overall though ultimately the most costly would be the most beneficial to the employee. When considering a compensation strategy you must take time to think in a matters of the holistic wellbeing of the employees of course but the company as well. Employees will be more grateful to be able to have healthcare overage as well as being able to cover those members of their immediate family. Offering bonuses are a great way to keep an employee with a smile on their face temporarily as well as tuition reimbursement. However, having insurance and a wellness program are two factors that could ultimately be lifesaving components.
Many job-seekers scout for jobs now not looking for bonuses, or such. They are looking to feel the security of being able to keep up with regular check-ups as well as being covered for emergency situations. Wellness programs are also becoming more socially accepted, employees are legalizing that having access to such is saving them time, eliminating the need for surgery, medications and so forth. Providing this access will definitely add you to the list of competitive companies. Secondly, would recommend that the company pilot the program with a select group of staff, I. E. The corporate office or management only.
What this will allow the company to do is streamline the process before rolling out the program to everyone. When you pilot a program you have the ability to eliminate all hiccup so that once introduced to the general public it runs smooth as possible. Lastly, I would commend that the company eventually introduce the other 2 fore mentioned compensation strategies in the future because having a well- rounded competitive benefits package is the difference between you and your competitors. Recommended that you introduce them in the following order bonuses and then tuition reimbursement.
Bonuses are a great way to help absorb the additional costs of premiums and any tax liability. It increased their take home pay so that they can have a better quality of life. If this step is implemented 2nd employees will see this as steady progression and their faith in the company will increasingly grow. After this implementation the icing on the cake will be offering tuition reimbursement. This will be an added benefit as the employees now have health coverage, they have a consistent opportunity to increase their take home pay and now above all they can become degreed professions for the industry.
This will add a sense of completion to their lives and you the employer would have made it happen. It is a lasting memory that they would never be able to forget. Remember this is a costly option however, by the time implemented revenue would have increased because productivity to receive bonuses would have KY rocketed. They all go hand in hand when introduced in the correct order. Conclusion In conclusion, companies use a wide range of compensation packages to compensate their employees however the most common forms of compensation are bonus structure, tuition reimbursement and healthcare.
Within a bonus structure companies compensate their employees by providing incentives based on levels of performance and the achievement Of company based goals. While the employees are reaching these goals productivity increases meaning you are able to take on more business to significantly increase revenue. Another benefit regarding offering bonuses is that the turnover rate for your company will not be as high for compensation due to employers leaving to work for competitors.
Offering tuition reimbursement aids in creating a knowledgeable staff, a workforce of industry experts as well as sending your company into the next level of employee relations in regards to employee compensation. Ultimately, companies influence their employees to go to school through tuition reimbursement. This will help your employees build a standing relationship of trust with you. When an employee trusts his/her employer they work for hem with no regrets and with no limits.
Another added benefit regarding the tuition reimbursement plan is a great way to streamline the process is that the employee must obtain a degree in a field of study that is beneficial for the employee within the company. Health and Wellness benefits are especially beneficial to those employees who have health issues and don t have the finances to get them taken care of. The ultimate benefit in regards to health and wellness is that the employer knows that the amount of call ins due to illness will decrease as well as losing employees to competitors who offer ore competitive health plans.