Types of Payment Structures
Discuss about the Compensation and Benefits Review.
Reward system refers to any monetary, non-monetary and psychological forms of payment that employers provide to their workers in exchange for the work performed. The study of the pay structure enabled me to learn a few types and structures used in paying workers.
Base pay is a reward system based on a minimum amount that an employee receives which serves as the lowest level of pay per hours worked.
Performance-based pay is another system where payments are made depending on the level of productivity a worker delivers (Shields, Brown, Kaine, Dolle-Samuel, North-Samardzic, McLean, Johns, Robinson, O'Leary and Plimmer, 2015). Salary based payment refers to a reward scheme where the payment is a specific amount with no bonus or extra amounts even in exemplary performance. Competence-based payment relates to the reward structure where payment is based on one's level of skills, knowledge, and experience obtained as opposed to a job title.
Besides, I learned on the pay structures including career family pay structure. The structure is characterized by a single grade structure with each grade divided into a job family such as those belonging to operations, administration, and marketing. Inside the system, a common feature is used to evaluate the performance of the system as the tasks are similar. On the other hand, a job family pay structure resembles the career family pay structure nut only differs in the grading system where each job has a unique pay structure based on the roles played by individuals in the society (Armstrong and Taylor 2014). The last one learned involves the broadband structure involves a method for evaluation and creation of job grading which establishes the pay for specific positions entailing the traditional and new pay structures.
Pay structures in organizations depend on the externals factors that affect business. The labor organizations exist to determine the minimum amount of money individuals should have. In this case, it affects the type of pay structure that one can select thus leaving employees to a limited choice. For instance, if the government sets the base pay at a point, firms cannot employ individuals and pay them based on the performance. Organizations, in this case, would be forced to set a salary based pay to meet the demands of a government policy (Gupta and Shaw 2014).
Organizations through their policies set their pay gap limiting what should be earned on the lowest and the highest amounts to be earned by individuals in an organization. Every career has a pay grade stipulated by the government through the labor union that assists in setting a cap on the salary scale of individuals (Kolk. and Perego 2014). In this respect, it affects the pay structure of businesses. Organizations have to consider the recommendation whenever setting or creating their pay structures.
Determining the Structure of a Remuneration and Performance
Besides, I learned of the several legislations affecting a pay scale in organizations. Regulations on gender have to be observed while selecting and paying employees to provide a balance in the pay. In this case, a base pay has to be set on workers to prevent discrimination in pay based on the gender. Equality agencies also play a critical role in affecting the pay structures set in organizations. I discovered during the study of the roles played by the equality agency that champions for an equal pay among individuals working in a given sector.
On the other hand, pay structures are influenced by the cost of living existent in an environment. Businesses running in places with low living costs determine low wages for individuals to meet their daily needs. For instance, the cost of housing, food, and entertainment remain low thus prompting for a lower salary that can cater for the same. On the other hand, environments with a high cost of living call for increased salaries that match the demands of the society (Kolk and Perego 2014). In this case, the pay structures in organizations are determined by the cost of living in a given environment.
Moreover, I learned the role of unions in determining the pay structure selected in organizations. Unions serve the role of collective bargaining which determines a number of money individuals receive for certain tasks (Gupta and Shaw 2014). Besides, they determine the working conditions and the compensation schemes accorded to workers. In this respect, they determine the amount of money to be paid by organizations which can be reviewed upwards according to life demands.
Labor market conditions also affect the pay structure to be used in organizations. The demand and supply of workers in organizations determine the pay one individual receives. For instance, areas with limited numbers of medical professionals raise the amount of money to be paid to meet the competitive nature of the supply of labor (Kolk and Perego 2014). In this case, workers will be paid higher as opposed to a case where there are several employees who give the workers less bargaining power.
Profitability is another external factor that affects the pay structure selected by a firm. The profit ratio realized in a firm determines whether to pay workers through the performance based pay or the fixed salary. Companies dealing in marketing efforts would opt to use the pay on performance to boost their profits and remunerate employees based on the marketing efforts achieved (Kolk and Perego 2014). Selecting a salary based one would impede the firm from making profits and thus proves to be less efficient in driving revenues for the firm. Therefore, I learned the importance of focusing on the external factors in an environment whenever selecting the type of pay structure to use.
Making Benefits a Compulsory
Employee benefits refer to the sets of benefits employees acquire during and after employment apart from the normal pay. The benefits include aspects such as medical cover, prescription, relocating assistance, insurance plans, and retirement benefits (Dau-Schmidt, Finkin and Covington 2016). The benefits go a long way to improve and reduce the cost of living for employees through the several assistance programs given through employee benefits. In this respect, benefits to employees should be made mandatory to offer a blanket cover to workers. I feel the necessary nature of benefits on employees to assist them to cut down on the costs of living especially in cases where employees get sick.
On the other hand, making benefits a compulsory enables organization increase career growth among their workers by having learning initiatives where workers can be sponsored for courses. It is difficult for individuals to make the self sacrifice and save money to invest in education and other activities. However, the ability to secure benefits from institutions is essential towards guaranteeing growth from the benefits (Dau-Schmidt, Finkin and Covington 2016). Employees ought to be covered through an insurance program present only for those who decide to follow the benefits. By deciding to make a move optional, other individuals shall lose the direction in life and end up suffering at the end.
The text records the importance of benefits where it records several issues dealing with saving lives and providing a proper retirement package for individuals. It is difficult for everyone to save towards retirement and the reality poses as a challenge to making benefits optional. Employees work tirelessly to make both ends meet in life and have to be assured of a backup plan. For instance, a worker who gets involved in an accident with no medical cover and retirement benefit risks spending a lot of money on a treatment plan which can consume all the finances yet still fail to return individuals back to their career. In this case, it becomes difficult for one to continue with life. However, making a move a mandatory allows for an easy solution in such as the case where the medical cover shall career for the treatment plan which in the case of failure would call for the retirement benefits accumulated to assist one begin a new life (Bryant and Allen 2013).
Besides, advocators to the contrary demand for the freedom of choice in such matters. However, the freedom comes back to haunt individuals where a calamity occurs or during retirement when people seek to be assisted in covering hospital bills as well as finding a foundation to succeed in life after the end of a career (Kolk and Perego 2014). Transferring a burden to other individual’s works against the spirit of development where people are supposed to take charge of their lives and ensure their business lives through the participation in the activities (Bryant, P.C. and Allen, D.G., 2013). Consequently, individuals that refuse join the benefits plan risk death in case individuals fail to gather the necessary finance needed. Therefore, the lesson learned on benefits convinces me to base my reasoning and conviction on the compulsory position for benefits to employees. It is prudent to have a uniform interest among individuals to encourage a proper living, insurance, and a sober retirement plan.
Employees are entitled to a reward scheme as a toke to their performance at places of work. Firms can do so through several approaches which vary from company to company. Recognition can be done at an organizational or individual level which all drive benefits towards motivation (Gupta and Shaw 2014). Employees tend to respond positively whenever appreciated and increase their efforts towards creating value for businesses.
Employees can be recognized through bonuses which act as appreciation for the good performance. Bonuses are used to reward individuals based on accomplishments made that drive profits into organizations. For instance, individuals working in the sales sector who manage to surpass their targets set by the management ought to receive bonuses. Consequently, the recognition for efforts leads to increased efforts even to surpass higher limits set by the organizations (Gupta and Shaw 2014). Employees paid little salary but recognized through bonuses tend to remain committed and loyal to businesses.
Profit sharing is another way of recognizing workers by creating a pool of money which is disbursed to employees by taking a percentage of the profits in a company. The amount delivered to employees reflects an amount of the salary one gets thus providing a uniform level of reward (Gupta and Shaw 2014). The benefits can be in the form of money or shares were given to the employees. The profits can be given at the end of the financial year when the firm consolidates its profits. The move acts positively towards recognizing the efforts of individual or group of employees which fosters increased performance.
The option of assigning a proportion of stock to the upper and middle-level management is a way of recognizing efforts of employees. In fact, the method is efficient as members are assigned a certain percentage of ownership of the stock every time they registered positive results. In this case, it promotes performance and further drives a sense of ownership to a firm thus encouraging a low employee turnover rate (Kolk and Perego 2014). Stock option further drives competition as members work hard towards getting recognition. The stocks are awarded as a reward considering the salary one gets and is given at a uniform level in the case of group reward. The move serves as a reward for sticking around in companies and motivates increased improvement for a company.
On the other hand, monetary recognition fails to serve as the only source of reward. In his respect, non-monetary rewards act well towards helping workers. Individuals can be rewarded for their efforts in business by promoting them to a higher level or managerial level in the society. Recognizing workers through promotion allows for extra energy in carrying out tasks. On the other hand, giving a certificate of appreciation to workers goes a long way towards uplifting heir spirit towards productivity (Kolk and Perego 2014). Lastly, recognizing workers verbally is important towards making them shine out of the rest. Mentioning workers in yearly meetings increases their efforts towards increased production. Therefore, it is necessary to use a recognition system that gives the best reward to employees.
The materials covered in the topics address various ways through which workers can be rewarded and compensated for their efforts. The lessons draw much knowledge on selecting the required pay system and the factors to base on while choosing a mode of compensation to workers. At the same time, it gives knowledge on the external factors to consider before arriving at a form of pay for individuals. Besides, the lessons on benefits to employees assigned significant knowledge on the need to mandate a compulsory benefit program to workers based on the positive attributes it delivers to workers (Gupta and Shaw 2014). Lastly, it drives knowledge on rewarding individuals for their efforts and motivating them through bonuses and other reward programs open in the market.
Armstrong, M. and Taylor, S., 2014. Armstrong's handbook of human resource management practice. Kogan Page Publishers.
Bryant, P.C. and Allen, D.G., 2013. Compensation, benefits and employee turnover: HR strategies for retaining top talent. Compensation & Benefits Review, 45(3), pp.171-175.
Dau-Schmidt, K.G., Finkin, M. and Covington, R., 2016. Legal protection for the individual employee. West Academic.
Gupta, N. and Shaw, J.D., 2014. Employee compensation: The neglected area of HRM research. Human Resource Management Review, 24(1), pp.1-4.
Kolk, A. and Perego, P., 2014. Sustainable bonuses: Sign of corporate responsibility or window dressing?. Journal of Business Ethics, 119(1), pp.1-15.
Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., Johns, R., Robinson, J., O'Leary, P. and Plimmer, G., 2015. Managing Employee Performance & Reward: Concepts, Practices, Strategies. Cambridge University Press.
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