Compensation Systems and Employee Benefits

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Introduction

The skills and training needed by workers in today’s working environment has been greatly influenced by technology. The manager responsibility is to recruit, select, and compensate employees in its organization. Changes like this makes employees rely on effective management.

Emphasis is laid on output and performance. The manager and the staff create policies and programs to ensure their satisfaction through compensation. Compensation is a “systematic approach to providing benefits to employees in exchange for work performed” (Bagin, 2008, p.56). It recruits and measures job performance and satisfaction of employees.

Difference between job analysis and job evaluation

Job analysis is the process by which employees benefit from work they have performed. It has three components. Job contents which describes the duties and responsibility of the job. Job requirements that are used in the identification of formal qualifications, knowledge and abilities as well as personal characteristics required by employees to execute the job content and finally job context, which constitutes information concerning a specific job, its purpose and the position it takes within the organization. This practice helps to establish internally consistent job structures.

They locate the job in the organization structure, describe why the job exists and lists the major job duties and responsibly. They show the relationships with other positions within and outside of the organization. This is necessary for satisfactory job performance.

They identify the amount of thinking required in decision-making and the environment in which the problem solving takes place. It enables choosing the people with the highest levels of knowledge, skills, abilities, experience, and formal qualifications required to do the job.

They show the financial impact of the job and any licenses’ or special registration required. It helps in identifying the specific rights and limitations that apply to the positions decision-making authority. They show the crucial circumstances about a particular position and environment of the job.

They show the performance standards that are the requirements for effective performance and measures for evaluating performance. They show the trade unions and professional associations’ required. It helps in collection and report of job analysis information (Armstrong, 2007).

While job evaluation, is a systematic method of determining the walk to the organization of a job in relation to the walk of other jobs. It is concerned with how big and smart a job is to ensure that jobs of different sizes attract the appropriate pay differentials. There are two methods used. Job ranking, it is where the evaluator ranks the jobs from biggest to smallest. Job grading or classification, which uses a number of job related factors to create generic job descriptions for each grade.

Challenges encountered while developing internally consistent and market competitive.

Internally consistency compensation is the establishment of fair procedures to equalize payments with work performance. It involves creation of job designs, pay systems, and performance appraisals. It achieves job objectives through motivation of employees and determination of policies and practices that determine performance and behavior of employees. Market competitive compensation is the review of positions in the company to know their implications in the end and the much they deserve remuneration.

The challenges include determining equitable treatments in terms of wages and salaries due to the increasing responsibility and sustainability of companies. Ensuring appropriate analysis of employee positions to avoid legal problems and employee dissatisfaction.

Providing regular remuneration and performance reviews. Company performance is used in the measurement of employee strengths and weaknesses. There is the probability of promoting and paying employees beyond their level of competence.

A company has the ability to reduce the risk of loosing the talented employees to competitors. Ensuring there is a good relationship between the company and the external environment. The ability of the company to compete with compensation levels of other companies.

The manager can be unable to design appropriate payrolls, applicant, and employee training programs. The management can formulate policies and practices that produce the employee competence and behavior enough to achieve the company strategic goals. The manager can hire employees who have the ability to compete effectively with competitors’ technology.

Payment Quartiles

A merit pay system is a “method of determining the standard of performance of employees within a pay range” (Bagin, 2008, p. 77). Merit payment is according to the standards of performance and the pay range the employee is in. The guide chart may not have been well designed or communicated the employees are expected to seek changes from the managers.

The amount paid depends on the budget of the organization and the adjustments of wages in the wage structure. The guide chart shows a smaller percentage payment of employees in the third quartile compared to the first quartile thus the payment is fair.

Insurance

A health care insurance policy provides employers with benefit of an agreement to pay apart or all the medical expenses. The employee is supposed to cater for their medical insurance expenses but the employer can decide to provide a part or the whole health insurance premium. The costs incurred in the medical office are covered by insurance in areas such as illness, drug prescription, hospitalization including other medical services.

Due to the increased expenses on medical bills, employers are to pay a part or all through payroll deductions. Several employers approve their employees to cover medical insurance for their families. Other employees offer guaranteed coverage of medical expenses of their employees up to a certain position of promotion. Most employees do not accept companies where the employers do not offer health care insurance benefits (Bagin, 2008).

A change in business environment and society has effects on employees. Pollution of the environment through release of harmful chemicals, materials, and wastes generated by manufacturing companies has led to worse health conditions of people. Companies prefer introducing risk retention as away of avoiding unnecessary expenses.

An increased level of education has raised the living standards of people reducing the need of company involvement on employee benefit programmers. Governments’ intervention on the benefits of employees has led to adoption or negligence of some benefits of employees.

Economic and population growth worldwide has threatened business investment on employee benefits due to high charges on cost of business operation. There are increased levels of unemployment thus reducing job competition hence companies are not willing to spend on employee benefits. Companies charged high taxes tend to reduce expenses on employee benefits (Doyle 2006)

Conclusion

An organization general approach to compensation must be consistent with its overall strategic business objectives. The policies and practices should reflect the performance, behavior to be motivated, and the kind of employees to attract and retain.

Employees are aware of their benefits in the company.merit payment can result in a reduction or an increments on the base pay. There is increasing need to use a flexible compensation programmed links to employee performance. Benefit of employees can be in the form of financial rewards, non-financial rewards or according to the companies’ strategies.

Merit payment systems give employees feedback on work performance. It enables an organization to discern their employees’ strengths and weaknesses. There is need of companies to keep alert to changes in the labor market.Managers ensure talented employees are maintained in the company to improve its productivity. Managers must use employment laws to make employment decisions.

References

Armstrong, M. (2007). Reward management. New York, NY: Kogan Page Publishers.

Doyle, A. (2006). Job searching. New York, NY: Adams Media Publishers.

Bagin, D. (2008). The school and community relations.Oklahoma, OK: Pearson Publishers.

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