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Compensation Practices And Employee Attributions

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Question:

Discuss about the Compensation Practices and Employee Attributions.
 
 

Answer:

Introduction:

Telus is a telecommunication company which offers telecom products and services. The company is one of the largest telecommunication companies in Canada with its head office located in Alberta. It has five branches spread across the provinces. In 2001, the company was incorporated and registered as a trademark and its main focus was to pursue opportunities in the operating systems in the telecommunication but in recent years it expanded its line to producing mobile phones. There is high competition among the various brands that produce and sell software and phones. However, Telus has invested in offering high quality products; develop greater human asset and having a customer intimacy model in place which has allowed the company maintains its competitive edge. Dominance in the market has seen the company scale into greater heights regarding financial performance. The market for telecom products is very huge because there is an unstoppable growth of the industry. The operating system technology targets two segments, tier 2 and tier 3 telecom operators. The market for phones is estimated to grow by 70% in the next two years.  The number of employees has been increasing since the incorporation of the company in 2001, the majority being male though there has been a need for hiring more women in recent years. The workforce is of different age groups, but the majority are millennials who have the skills and who the company believes are very innovative. These employees have demand for a good compensation package that will motivate them to be productive.

The company uses some resources to create output which contribute to its success. They include;

  • People and skills. The software experts are trained on a regular basis for them to be competent in their research and managing the information system.
  • Storage whereby the information system provides a wide storage of data compared to those offered by competitors.
  • Minimal costs are incurred in preparing ,sharing data and injecting secondary data making it easily accessible to users.
  • The information system is supported by over 80% networks across the globe. This has made it to be preffered by users boosting sales.
 

Change Factors

As business keeps on changing, the approach to compensation should change as well. There is no flexibility in compensating employees based on position. Establishment of a total reward package that focuses on rewarding skills and performance has been at the top of the human resource department agendas which has to be attained. This will promote employee ownership. In coming up with this package, there are some factors that determine the policy choices in compensation. These factors include;

Employees wanting to belong to a particular labor union will affect compensation because the union dictates the minimum compensation package for its employees. They will be forced to give in to the pressure of labor representatives in determining and changing the pay scales. Labor groups lobby together their grievances and concern to address the government to make the government respond quickly to their burning issues.

Changes in the economic conditions also affect the reward package of employees. Salaries are different in an economy under depression and when it is booming. In case of a depressed economy supply of labor may increase resulting in low rates. Depression in the economy expose the company to risk of lowering profits, and this is a major concern to the management which requires prompt action.

The demand and supply for human resource affect the fixation of compensation packages for employees. When the supply exceeds the demand, a low wage may be fixed, and the vice versa is true. The productivity of labor has risen due to improved technology making it possible for employees to be rewarded through piece rates (Gatewood & Barrick, 2015). The proper understanding of the labor market by the company helps in strategy designing when it comes to exploiting new opportunities in the market. The recruitment of the right personnel acts as a boost for the company, and this greatly helps in offering the right product and first class customer care services by the company.

Employee turnover rate

High employee turnover hurts the company as it will have to incur more costs in finding replacements. In order to reduce the turnover, the company will be forced to set compensation package and benefits which will motivate the employees to continue working towards the success of the company. (Alam & Rubel, 2014). High employee turnover means that the company is on the verge of failure in its endeavor to exploit and meet market opportunities in the right manner.

This is a factor that may cause changes in the reward system of the company since the company will also want to offer competitive compensation packages in order to maintain its dominance in the market (Asibanjo & Heirsmac, 2014). If competitors offer high salaries to its employees, the company has to offer best commissions, benefits, and bonuses to retain the workforce. This factor, however, is not likely to affect the company because the reward package offers employees a benefit and bonuses. Stiff competition from competing firms that offer bumper salaries to their personnel forces the company to remunerate their staff well so as to encourage talent and skills retention.

Based on the variables mentioned above, Telus Company adopted compensation strategy based on performance pay for great performance rewards the best performance and not mediocre work. Hence performance is to be evaluated and measured on a regular basis, and a clear appraisal method has been developed for employees to understand the criteria clearly (Lu et al., 2014).

Individuals are offered bonuses based on attainment of their goals. In addition, reward is also tied to company’s profits where 20% is shared among the workforce. The company offers stock options to employees where they are allowed to purchase company shares for a specific price during a specified duration.

This compensation strategy has seen the company maintain its competitive advantage leading in the telecommunications sector. This is because employees get to control their performance and a slight difference in performance is easily identifiable.

 

Compensation analysis:

Gupta & Shaw (2014) opined that the overarching term compensation is the kind of strategy formed by business experts in order to motivate the employees for getting good performances. Employees while providing services have to face immense challenges in satisfying the needs and demands of the customers. Compensation and benefit is the systematic strategy for motivating employees towards services. Controlling the performance level of employees has major significance. Telus being one of the most recognizable telecommunication brands of Canada has implemented several compensation strategy and policy based on which employees tend to show their best services. Telus in order to run the business effectively has implement performance pay, quality bonus, rewards and recognition and so on. With the rapid progress of globalization the rage of target customers are increasing day by day. As opined by Anitha (2014), employees have to provide services beyond going the shift hour. Therefore, Telus business experts in order to give an effective compensation to the employees have decided to provide performance pay. The performance pay structure implies that after meeting the allocated target employees would get a certain amount of money. As a result, employees by anyhow intends to fulfill the allocated target so that they can achieve performance pay.

Moreover, after crossing estimated target the people are able to get additional incentives. In quest of delivering good production employees sometimes forget to maintain quality of services. In order to overcome this kind of issues Telus business experts have decided to implement quality bonus. Based on the quality of productivity the employees are able to achieve quality bonus.  Pan (2015) opined that the concept of performance pay, quality bonus is not effective in maintaining work life balance of the employees. As a result, large number of employees has to face immense health issues. In case of avoiding health issues organization like Telus has decided to follow health and safety act at the workplace. By implementing this very specific act, business experts tend to take the responsibility of employees who face any kind of health issue at the workplace. These kinds of compensation facilities enable the employees in availing overtimes and maintaining flexible work hour. Samnani and Singh (2014) stated that structural behavior is the concept with the help of which employees have to maintain specific organizational structure while being associated with an organization. Structural behavior is constituted with several components including organizational behavior, organizational culture and organizational ethics. Long and Perumal (2014) stated that every business organization is constituted with specific structure. Employees being a part of this organization have to follow this structure in order to maintain discipline. Business experts of Telus tends to maintain effective communication with the employees in order to motivate the employees for maintaining structural behavior. 

 

Contextual variables and structural variables:

Contextual variables signify a transitory factor that involved the setting in which an interaction occurs. Contextual variable is constituted with several components including task environment, business strategy, organizational size, organizational workforce and technology. Telus has appointed huge number of workforce by giving a flexible work environment so that employees tend to perform well towards the services. On the other hand, organization should follow proper organization structure to give a feasible work environment. Structural variable includes decision making and leadership, control system, communication and information, reward system and job design. 

Telus tends to follow a specific management hierarchy in order to control the entire process of business in the global market. As per the managerial policy of Telus, business managers follow participative leadership style at the workplace. Participative leadership style enables the employees in sharing their own views and thoughts to the managers. As a result employees get motivation in performing well towards business services (Noe et al., 2014). Managers of Telus on the other hand do not wish to impose their own decision on the employees. As a result, both the managers and the employees can maintain an effective communication with each other.

Employees do not show their reluctant attitude in maintaining this rules and regulations. As per the management system of Telus, business experts tend to follow proper business ethics. Employees from various geographical backgrounds and attitudes tend to get equal priority and response (Bal and De Lange 2015). By implementing gender equality act, human resource managers tend to recruit both male and female employees with equal respect and dignity. Large numbers of female employees are holding higher position in Telus. People belonging to various geographical backgrounds and attitudes get a complete comfortable environment within the workplace of Telus due to their flexibility in managerial system.

Implementation of diversity management is one of the most effective steps that made the entire management system Telus complicated. Human resource managers primarily focus on the competency and skill of the employees rather than focusing on their cultural backgrounds. Human resource managers are very much effective in recruiting employees from different geographical as well as religious backgrounds (Hameed, Ramzan & Zubair, 2014). As a result, the managers have faced se several issues such as communication barrier, psychological barrier and cultural barrier. Due to language problem employees have to face immense challenges in sharing their thoughts and views effectively. As a result, managers have to face difficulties in delivering the services within proper time. Being unable to meet the deadline employees have to face dissatisfaction from customers’ feedback. However, employees from diverse cultural backgrounds and attitudes have immense psychological barriers while making an effective collective decision (Oladapo, 2014). Due to cultural barrier employees cannot exchange views and thoughts regarding the success of business. However, as per the initiates taken from human resource managers of Telus, employees from different cultural backgrounds are provided effective training and career development program. With the help of an effective career development program, employees have enhanced their communication skill. As a result, managers do not have to face challenges in interacting with the customers effectively.

 

Management system:

Management system of Telus is constituted with several factors including quality system, performance management system, policies and procedure, information system, talent management system, change management system, risk management system and so on. Controlling the performance level of employees has major significance. Telus being one of the most recognizable telecommunication brands of Canada has implemented several compensation strategy and policy based on which employees tend to show their best services. Telus in order to run the business effectively has implement performance pay, quality bonus, rewards and recognition and so on. With the rapid progress of globalization the rage of target customers are increasing day by day.

Telus business managers do not intend to implement organization policy without communicating with the employees. As per the opinion of Gerhart and Fang (2014), the success of a business organization is entirely dependent on the performance level of employees. Therefore, implementing health and safety act, anti-discrimination act, gender equity act leaves major significance. Therefore, business managers before making organizational strategy tend to communicate with the employees effectively. After making a collective decision the managers tend to implement the policy within workplace.

Compensation plan determines what the Pay Mix should be for each sales role. Pay mix in general point of view is the ratio between base salary and pay of incentives at the stipulated target performances. Common practices that leaves a major impact on compensation mix includes competitive pay analysis, industry practices, compensation philosophy, culture and job dimensions. The primary purpose of making a proper compensation mix is to evaluate basic salary of employees, their benefits and incentives (Van De Voorde & Beijer, 2015). Employees would like to give their additional effort only when they would get necessary benefits in the form of increment, incentives or bonus. Telus being one of the most recognizable telecommunication companies of Canada has decided to implement two types of compensation plan including monitory and non-monitory. The business managers intend to provide rewards and recognition to the employees while implementing compensation and benefits. By keeping the basic salary fixed the employees are given equivalent rewards like gift coupons or any kind of material aspects. In addition, in order to appreciate the performance level the employees are given a promotion for holding the higher position (Gerhart & Fang, 2014). Telus tends to promote the employees as per their performance level rather than showing their experience. On the other hand, monitory benefits come in the form of increment, incentives and bonus.  

Recommendations and rewards: 

However, after evaluating the overall strategies of Telus regarding compensation and benefits some of the recommendations can be provided and the recommendations are as follows.

Telus should implement some social rewards and recognition policy in order to grab the attention of employees. It has been observed that along with giving immense facilities and benefits the business experts are maintaining rotational shifts. Employees have to follow this particular shift in order to maintain a work balance (Anitha, 2014). Due to this rotational shift, employees are facing immense health issues. In this kind of situation, the rate of employee turnover in Telus is raised enormously. However, it can be recommended that Telus can follow a particular shift for the employees based on which employees would not face challenges in maintaining this particular shift.

It has been observed the human resource managers of Telus within the gradual progress of business industry do not give their employees effective training and development session for enhancing their skills and competency level. In this kind of situation, employees sometimes fail to meet customers’ needs and demands (Pan, 2015). In order to render good performances the business experts should enhance their budget for training and development purposes. As a result, customers would not have to face challenges in receiving their services properly.

 

Reference List:

Alam, N., & Rubel, A. K. (2014). Impacts of Corporate Social Responsibility on Customer

Anitha, J. (2014). Determinants of employee engagement and their impact on employee performance. International journal of productivity and performance management, 63(3), 308.

Bal, P.M. and De Lange, A.H., 2015. From flexibility human resource management to employee engagement and perceived job performance across the lifespan: A multisample study. Journal of Occupational and Organizational Psychology, 88(1), pp.126-154.

Gatewood, R., Feild, H. S., & Barrick, M. (2015). Human resource selection. Nelson Education

Gerhart, B., & Fang, M. (2014). Pay for (individual) performance: Issues, claims, evidence and the role of sorting effects. Human Resource Management Review, 24(1), 41-52.

Gupta, N., & Shaw, J. D. (2014). Employee compensation: The neglected area of HRM research. Human Resource Management Review, 24(1), 1-4.

Hameed, A., Ramzan, M., & Zubair, H. M. K. (2014). Impact of compensation on employee performance (empirical evidence from banking sector of Pakistan). International Journal of Business and Social Science, 5(2).

industry using boosting. IEEE Transactions on Industrial Informatics, 10(2), 1659-1665.

Long, C. S., & Perumal, P. (2014). EXAMINING THE IMPACT OF HUMAN RESOURCE MANAGEMENT PRACTICES ON EMPLOYEES'TURNOVER INTENTION. International Journal of Business and society, 15(1), 111.

Lu, N., Lin, H., Lu, J., & Zhang, G. (2014). A customer churn prediction model in telecom

Noe, R. A., Wilk, S. L., Mullen, E. J., & Wanek, J. E. (2014). Employee Development: Issues in Construct Definition and Investigation ofAntecedents. Improving Training Effectiveness in WorkOrganizations, ed. JK Ford, SWJ Kozlowski, K. Kraiger, E. Salas, and MS Teachout (Mahwah, NJ: Lawrence Erlbaum, 1997), 153-189.

Oladapo, V. (2014). The impact of talent management on retention. Journal of business studies quarterly, 5(3), 19.

Osibanjo, A. O., Adeniji, A. A., Falola, H. O., & Heirsmac, P. T. (2014). Compensation

packages: a strategic tool for employees' performance and retention. Leonardo Journal of Sciences, (25), 65-84.

Pan, F. C. (2015). Practical application of importance-performance analysis in determining critical job satisfaction factors of a tourist hotel. Tourism Management, 46, 84-91.

Samnani, A. K., & Singh, P. (2014). Performance-enhancing compensation practices and employee productivity: The role of workplace bullying. Human Resource Management Review, 24(1), 5-16.

Satisfaction in Telecom Industry of Bangladesh. ABC Journal Of Advanced Research, 3(2), 26-37.

Van De Voorde, K., & Beijer, S. (2015). The role of employee HR attributions in the relationship between high?performance work systems and employee outcomes. Human Resource Management Journal, 25(1), 62-78.

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