Executive Summary: Compensation and Benefits

Executive heavyset The purpose of this paper is to highlight the silk hat practices followed by HRM and to ack straightawayledge the splendor of wages and benefit strategies utilise in organizations all(prenominal) around the world. wages and upbeats ar used by assorted organisations globally to commit, motivate and go antecedent their employees. This paper contains a case studies, summary and analysis of academic journals and books to go through the latest trends in allowance and benefits field.The lead primary components which ar used in traffic patterning a strategic stipend plan atomic number 18 listed. During the course of the paper, it discusses how the fee and benefit strategies can be tailor-made for the incompatible generations joining the custody, and how these strategies be used in the organisations. Further, this paper highlights four diametric case studies giving the reader insight on the incompatible ship canal stand and benefits escapes wer e used by organisations in un kindred scenarios.In this present twenty-four hour period circumstances, with employees having access to all kinds of information regarding salaries, wages and benefits of some other companies it is extremely principal(prenominal) for either organization to overhear a fair and an photogenic fee frame in place. Introduction Employees be the just about valuable assets of any organization. The main purpose of military personnel resource trouble (HRM) is to manage the ripening and effect of concourse employed in an organization.Some of the world-shattering tasks of HRM comprise of attracting and retaining employees with the dependable skills and abilities, match people to the right positions within an organization and to align employees goals and objectives with that of the organizations. All these key tasks argon directly or indirectly alter by compensation and benefits plan which the human resource management decides. hire and benefits r edefines pass judgment and success in any body of work.An efficient compensation and benefits strategy is seen as an opportunity by organisations to distinguishableiate themself from their competitors, who may otherwise demand away talented workforce. Hence, organisations need to know the evolving needs of the working tribe to make sure they vortex the most competitive package. This paper adopts a general approach which may be relevant to number of different organizations or industries and discusses how the new generation workforce is making an impact and forcing organizations to multifariousness their traditional compensation strategies.This paper likewise examines how companies located in different sectors and countries look at compensation and benefits aspect of human resource management, to attract and retain their extremely qualified staff. Finally the paper summarizes and analyses some articles cogitate to HR practices in compensation and benefits, and see if they fit into organizations seeking best practice. correctment and benefit strategies for current generation workforce stipend is a major driver in the success of any organization and it is also true that it is one of the highest expenses for an organization.Therefore, compensation is always under heavy testing by the top executives of a political party. Compensation is non only guardedly analysed by the management, that also analysed by employees and prospective employees. If properly implementd, effectual compensation design can improve organizational effectiveness, support human capital requirements of the organization, and motivate the employees to master key corporate strategic and fiscal goals (Ellig, B. R. 2007). Effective compensation and benefits strategy is no easy task, especially with the braggart(a) organizations and ever-changing demands of the workforce.To frame the most attractive compensation and benefits package, organizations must now tackle the fundament al landscape change in workforce requirements and demands. Employees born(p) in the 60s and 70s (generation X) call for ceded place to a new generation of workers (generation Y). A flexible approach to compensation and benefits is now required to satisfy the different priorities of these generations. Planning for the future has great been the motto governing Generation Xs approach to their careers and so, traditionally, a generous pension provision compensation plan has been the key to attracting workers.But for Generation Y, priorities have changed. For instance, in a inquiry conducted last stratum, just 4% of 16-24 year olds were attracted to their employer because of their pension contribution, compared to 17% of 45-54 year olds (HR magazine, March 2011). Certainly, younger workers are increasingly questioning the customs and traditions of the workplace and now those same pension plans which were previously considered as synonymous with security, are now regarded as unstable .In present day environment, employees have become very much more(prenominal) educated on the possibilities obtainable to them with sources like online salary calculators, persistence chat rooms and so on (Schneider, B. , & Paul, K. B. 2011). Employees now know more about current grocery store pay levels, new opportunities and how to successfully treat compensation packages. Keeping these changes in mind organizations include many other noncash components to the potential cash components to come up with a fair, competitive and an attractive compensation program (Schneider, B. & Paul, K. B. 2011). Employee benefits are indirect forms of compensation provided by the organizations to their workforce as part of an employment relationship. The competition for quality employees in todays market is tough and employers must do more than just offer a fair salary to compete for the best employees. Employees also look forward for a unattackable benefits package in fact employees have cock-a-hoop accustomed to generous benefits programs, and join an organization expecting them.Employee benefits exist in organizations all around the world and the levels and range of these benefits vary between countries. Some of the benefits companies offer can be like participation accommodation, company provided vehicles, health insurance, retirement benefits, easy loans, travel benefits, workplace flexibility, work-time flexibility and so on. (SHRM, 2011) Compensation and Benefit strate gies used in organisations As per Kevin OConnell, there are ternary primary components in a strategic compensation plan. First, building a solid foundation for the plan to understand the business strategy is required.Where the company is now and where is it heading to in the future, what are its short bourn and long term goals. This will provide the necessary information needed to construct a solid framework for the design of a compensation plan. Second, judgment organizational capabiliti es and how the role of compensation plays a key role to achieve organizational goals is critical. This will provide an excellent understanding of what positions are the most critical to a companys future success and the various compensation options available to motivate employees to achieve this success.Third, aligning compensation with human capital management initiatives will help forge a plan that allows the company to successfully recruit and retain employees (OConnell, K. 2007). We will see how different organizations have subjugate significant business challenges by re-evaluating and strategically designing new compensation plans. By striking the right balance between organizational goals and employee needs, compensation plans can play a major strategic role in the success of a business. Jamba juice case Jamba juice was founded in 1990. It is a leader in blended-to-order fruit smoothies and fruit juices. Source http//www. jambajuice. com/) Since its inception, it found empl oyee memory as a major problem. It was located in San Francisco bay orbit and therefore the employees had more options with other employers situated there. A lot of these employers were applied science based and offered more generous monetary benefits than the food retailer. To tackle this problem, Jamba Juice introduced a compensation plan, called J. U. I. C. E plan which allows the general manager to set about a percentage of stores cash flow depending on their businesss final movement. It allows manages a share in the net over a period of three years.When the general managers increase the year-to-year sales, bullion accrues in a retention account, which is payable only in three year cycles. This retention account non only provides short term retention benefits, but also incentives to stay with Jamba. Also, executives at managerial positions are offered stock options. And, when assistant managers are promoted, their general managers also receive a cash award of $ 1000 for their development efforts. In a highly competitive industry Jamba was able to successfully reduce turnover. (Mello Jeffrey, 2011) The MAERSK wayMAERSK not only rewards absolute performance but also focuses significantly on performance relative to peers, says Alex Penvern, Global Head of Group Compensation, Rewards and Executive HR. This had not always been the case. Less than five years ago, rewards in the company were characterised by confidential subsidyes, awarded with very little transparency. One of Penverns first challenges when he joined MAERSK in 2008 was to create a scalable, measurable and quantifiable compensation and benefits structure that was understandable and could, over time, be rolled out uniformly across the organisation (Source http//www. aersk. com/Pages/default. aspx). He spoke to CEOs of apiece business within the group and focused on the executive compensation structure that focussed on relative distribution. During these conversations, he discussed range of different performance criteria, happening in annual sessions which were a part of the performance management cycle. The outcome was a relative performance distribution of the companys most successful and less effective performers. The company believes that our people are motivated by this constant striving to do even out better, says Penvern. You can never rest on your laurels or spend too long patting yourself on the back, because you know how hard everyone else is running. We compliments people who thrive in this atmosphere. This is brought in practice and reenforce by a carefully considered distribution of rewards to the highest performers. Since the introduction of the pay-for-performance scheme, fewer very high performers are securing a significantly larger share of the bonus on offer. The highest performers receive nearly double the bonus opportunity that they did few years back but to earn that bonus they need to remark up or stay ahead of their peers or market.While P envern does underline the value the company creates by this performance culture, he believes that the transparency of its bonus system is just as important. The lesson is clear. Company has to build employee engagement and drive performance both by having a clear and transparent compensation scheme that links pay and performance and by communicating this consistently in order to reinforce and reinstate the belief that pay and performance are linked (Bonic, Davies, Brood, etall, 2011) Design and Engineering group in DelawareA undersized to medium design and engineering group in Delaware, employs engineers and designers, most of them who are in their 30s. nigh of the employees were the primary wage earners in their families and have several dependents. This company pays wages that are slightly lower than those of its competitors, but it offers a fully paid insurance program that includes health, pharmacy, dental and core care coverage for employees and their dependents. By puckeri ng the employees benefit needs the company enjoys very low employee turnover (McConnell, J. 2003 Pg. 235). Mississippi garment manufacturerA garment manufacturer in Mississippi pays on a piecework basis. Most piecework plans in garments factory in general must guarantee pay equal to at least the legal minimum wage. In this particular proposition company, new employees receive an hourly wage until they have acquired the skills required to meet performance standards. Then the manufacturer pays them on the basis of the number of pieces they give rise in an hour. The company has designed its compensation approach to retain good and productive employees i. e. those who are continuous good performers (McConnell, J. 2003 Pg. 232). ConclusionCompensation whether i the form of salary or benefits is a key element in both attracting and retaining employees. With careful and logical thinking companies should design a program that will significantly contribute to obtaining and retaining the typ e of employers who perform best for that company. Compensation professionals play a critical role in enabling organizations to execute their business strategy. The examples in this paper demonstrate how organizations have overcome significant business challenges by redesigning their compensation plans as seen in Jamba and MAERSK.We also have seen how a small company like the garment manufacturer in Mississippi use compensation package to retain highly perform people and do away with low performing people. Some companies like the one in Delaware uses non monetary benefits to keep their workforce happy and content. Compensation and benefits have a negative effect on the company if not properly managed. Collapses of big companies like Enron and Global crossing are examples. These are direct results of managerial behaviour aimed at short term pay maximization.That behaviour is in turn a result of the executive pay structure that measure and reward performance based short-term financia l results. Managers are under constant pressure to show the expected / desire results the management wants to see in order to continue to be rewarded liberally (Stabile, 2002). Compensation experts need to be at the focal point where strategy, organizational effectiveness and human capital management congregate. They need to have a clear understanding of the business and organizational issues as well as the future direction of the company.Strategic compensation and benefits design is not a gravid bite to impress management. Its the process behind compensation plan design that links and binds strategy, organization effectiveness and human capital together. 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