All businesses have a compensation and benefits plan in which to satisfy the employee to create productivity. Compensation and benefits plans require to be tied to an organization’s planned mission and should take their direction from that mission (Hansen, 2009). Since compensation and benefits are the significant part of HRM in most of the organizations, compensation and benefits education reflect many concepts and practices are pertaining to HRM. Human Resources perform do not function in parts. They need to be logical, planned and strategic in the situation of the bigger business of, which they are a part. Any person in HRM is first a corporate partner of the business and then an HR executive in their personal disciplines such as compensation and benefits.
A company partner is the one who is loyal to the corporation passionate about the business first and then to his or her personal discipline or area of work. This research paper will identify the main elements of compensation and benefits as well as teaching strategies of these functions. It is significant to implement compensation and benefits in an equally beneficial way, for the organization and the individual.
Prior to any argument about compensation and benefits, it is important to understand the difference between direct and indirect compensations. Direct compensation is defined as any reward, typically in stock and cash, given in direct fraction to performance. Indirect compensation is not associated to the performance and is given in the form of several benefits (Dechow, Myers, & Shakespeare, 2010).
Compensation and benefits plan must cascade from the HR strategy and the organizational mission. However, it is mainly critical in compensation and benefits as a very large portion of the cost of performing business is due to compensation and benefits. This criticality is more obvious when corporations are struggling to stay afloat.
Employee Benefits are provided from many corporations to attract the employees and to retain them. These benefits and compensations aid the organizations to increase morale and to promote employee performance and their productivity. Benefits are provided also to general wages in a wide variety from corporation to corporation in the form of, not restricted to, vacations, paid holidays, sick leave, dental plans, health insurance, and pensions that are not on the employee's performance basis.
Advancements in HRM
Developments in global HR technology permit HR professionals to rationalize administrative processes, improve workforce planning universal, and play a strategic role in offering equal compensations and benefits to the employees of the corporations they belong (Hansen, 2009).
An important compensation package is that provided to United States Military Service Members. The military offers numerous types of compensations; Basic Pay is the important and main part received by all on service members and service employees. “Special pay that is given to them is referred to qualification and special skills that a military affiliated member possesses such as professional flying qualification, foreign language skill abilities, hostile fire, dangerous duty skills and combat pays when service members are living in uncomfortable and an inferior environment or deployed away from family members (Oyer, 2008).”
Allowances are the second most important source of income. They provide for a monetary allowance, housing and food when the state does not offer services for specific needs. Additional allowance is the Basic Allowance for Housing and Basic Allowance for Subsistence, these allowances are the bulk of the service members total pay that are not taxable providing another benefit of military pay.
Other benefits include free dental and medical provided to the medical compensation programs for health care of their dependent relative. Service members also obtain two and one-half days per month vacation time; educational benefits, and life insurance plans. Reward and recognition systems are encouraging and motivational HR tools used by organizations to motivate the commitment from personnel who feel good about doing good work (Hansen, 2009).
The significance of recognizing and rewarding employees for their influences to the organization cannot be understated, the money is the best appreciation, and safety is that best reward. Personnel who feel sincerely appreciated by their employers are dedicated and loyal to achieving organizational goals. Effective recognition and reward, systems, cultivate employee loyalty and satisfaction that eventually affects performance measures such as efficiency, customer satisfaction, financial results and effectiveness (Oyer, 2008). Inappropriately, not all recognition and reward programs are effective. There is a threat of negative consequences when unsuccessful incentives are adopted resulting from erroneous theories or poor planning. Unequal compensations, unequal benefits and unequal distribution are the key causes for the depressing results.
According to researches carried out in the HRM compensation and benefits it has been perceived that the corporations who believe on providing equal compensations and benefits always obtain retention traits and superior employment. These corporations receive the best performances and good worker spirits from the employees and have a strong relationship between the company and employee that promotes to the health work environment.
Equal compensations, benefits, and equal opportunities are very essential to be provided to the personnel. Equal wages strategy and its application decrease the absenteeism ratio and upsurge the trust of the corporation on the employees and a strong relationship between staff and the company has positive effects on the success and productivity of the company (Oyer, 2008). Moreover, the equality of compensations and benefits controls work turnover for the company. Like other healthy strategies, the functionality of equal pay act by the corporations is a successful method to create better employee satisfaction.
Management is needed to pay what is dictated from outside pressures such as the government that requires managers to abide by Federal and state laws. Some of these laws comprise the Fair Labor Standards Act of 1938 that sets the minimum wage for the workers stating visibly the number of working hours that an a worker can spend in working before demanding the employer to pay overtime (Dechow, Myers, & Shakespeare, 2010). The union holds a huge influence on salaries and wages through strikes for higher paying salaries for union staff and other members. If the organization aims to appoint and retain the most experienced and suitable employees, it is vital to offer a competitive compensation package that the modern market is providing in the same capacity of work.
Some competencies need to be effective. One such competency is teamwork. This can be practiced and learned in some of the class activities done in classes and learnt how to share the work in the teams and to give the best pertinent work to each member of the group activity. This teamwork, if learnt proficiently in the classes can be executed in the activities in the family or personal life to avoid the complaint of parents or siblings or the life partner about the equality of work. This is especially significant in the United States where individuality is encouraged from childhood. Another competency is communication. An effective compensation and benefits program needs knowledgeable managers who can communicate efficiently. These leaders must be able to relate rewards with performance. They should have a rudimentary understanding of compensation and benefits as tools for development, attraction and retention.
Achieving the organizational objective to provide competitively and flexible compensation and benefits program is one of the focal points to satisfy and attract potential and existing employees in the company. An effective compensation plan must have a well-designed package that control compensation costs, motivates employees, and ensures equity. The best compensation plans reflect the values of the employer. Along with their compensation plan, a benefits program must also be part of a manager’s compensation strategy. Human resource management within the corporation needs to establish a plan that will aid solidify employees' loyalty to their corporation by offering a competitive compensation and benefits package.
Dechow, P. M., Myers, L. A., & Shakespeare, C. (2010). Fair value accounting and gains from asset securitizations: A convenient earnings management tool with compensation side- benefits. Journal of Accounting and Economics, 49(1), 2-25.
Hansen, F. (2009). Currents in compensation and benefits. Compensation & Benefits Review, 41(6), 3.
Oyer, P. (2008). Salary or benefits? (Vol. 28, pp. 429-467). Emerald Group Publishing Limited.