Employees are driven by a numerous motivators to stay in the company, but the biggest is simply getting a regular paycheck. Ensuring that the compensation system is effective is not just important but critical. A few organizations evaluate their compensation system to identify any shortcomings. It is always important to look at how the organization can improve its compensation strategy to attract the best candidates who can innovate and lead the company in the industry. In order to retain high performing employees, the compensation plan should offer more than just a competitive salary. A good example is Costco and Walmart, on the benefits side, 82% of Costco employees have health-insurance coverage, compared with less than half at Wal-Mart.
Through rewards and recognition programs, organizations seek to find ways to motivate their employees with hopes of receiving better job performance, better job satisfaction, and lower job turnover. Aflac has developed a corporate culture that has been devoted to keeping its employees well cared for on an ongoing basis. With more than 4500 employees in the US, Aflac have consistently been recognized as one of the best and most ethical companies to work for in corporate America. Aflac’s reward structure is considered a performance base structure that focuses on recognizing and rewarding their employees. Rewards are given based off of individual performances, team
By achieving to provide these reward programs for its company employees it stay in line with two of its guiding principles which is to supply quality service for their agents and provide an enriching and rewarding workplace for their employees. These rewards are also used to attract better qualified employees and to push employees to have a greater impact on their community. The needs of the company’s employees are a driving factor behind Aflac’s total rewards programs. Aflac’s total rewards statements which was originally a one page document is now an in-depth review of the value of the employment compensation and benefits. These are examples of non-traditional rewards that are used by Aflac. Traditional rewards that Aflac uses is that the company has an “Volunteer of the Month” where one of their employees goes and volunteers for a charity of their choice and they get rewarded by the company they also offer bonus, wages, internal promotion, voluntary benefits and paid leave.
A total compensation system could prevent an organization from being effective in several ways; for instance, if their total compensation package is not aligning with the employee needs, “total compensation influences employee attraction, motivation, and retention. However, the importance of the various components depend on the person and his or her situation”(Jackson, S. E., Schuler, R. S., & Werner, S. 2012). The compensation system within an organization should align to the overall Business plan to achieve expected results. In other words, the total compensation includes: base pay, performance based pay, benefits and services, and nonmonetary rewards. All of this together should reach a balance; otherwise, the expected results would be devastating. During recession, many Americans suffered, and the economy pressured many organizations to cut workers. However, experts on the matter explain, “In light of the massive number of layoffs, pay cuts look like the more humane cost-cutting tactic because they save jobs. UCLA management professor David Lewin says a small reduction in pay, when handled carefully, can even foster a collegial spirit during hard times. “It sends a signal that no one is expendable, but everyone is valued. We all suffer the pain
Research indicates that 54% of employers believe pay and reward play a key factor in staff retention (XpertHr 2011). Contrasted against why employees leave an organisation 50% stated that it was due to poor pay and performance not being recognised through rewards (Personnel today, 2004).
One of the best ways to keep employees from walking out the door is to pay a higher salary. Paying employees more in salary, however, won't necessarily align them with the company's priorities. In order to do that, companies need
You are the HR manager of a relatively new retail company that has both retail stores and Internet sales. Your company is steadily growing in revenue and profitability. The company realizes that in order to retain the solid, highly productive workforce it currently has in place, it is important to enhance the base compensation and benefits package offered to the employees. The company currently offers a basic compensation program and only federally mandated benefits. Employee surveys suggest the compensation and benefits program may be out of date. Employees are beginning to consider leaving the organization.
Salary growth effects on turnover were greatest for high performers, that is, high salary growth significantly reduced turnover for high performing employees. Abassi and Hollman (2000) in their study have identified lack of recognition and lack of competitive compensation systems are some reasons for employee turnover in the organization.
When determining what method to use to compensate employees, a company must be aware of the impact that different compensation methods can have on employee performance, and on organizational culture. Unfortunately, there is no one-size-fits-all answer to the question of employee compensation. Some employees will respond very well to a program that other employees might balk at. Similarly, some companies or industries may flourish under one sort of compensation scheme, while others are more successful with different schemes. This paper will examine the various methods of compensation, and will speculate on what it is about compensation that acts as a motivator for
Designing an effective employee benefit and compensation program is the outcome of managerial expertise. In the given case it has been emphasized that the HR director of a midsized company will have to design and select the employee benefit program to balance the cost as well as the employee
Reward systems, reward strategies, incentive plans and incentive structures are all terms to describe the systems or plans organisations utilise in order to influence the behaviour of its employees’ (Kerr, 1995; Rubenfeld and David, 2006).
Compensation practices are crucial to attracting and retaining employees. Compensation practices consider market conditions (external pay equity) and performance based differentiation (internal pay equity). In addition, performance based incentive payments are also often included, and have been found effective particularly in the case
In the current economic situation, companies are relying on strategic compensation as a new way to motivate, engage and retain their employees. Strategic compensation is a tool organizations use to improve motivation and increase performance, while linking its workforce with the company’s objectives. Compensation when used strategically, it becomes a power tool that gives firms a competitive advantage (Snell & Bohlander, 2013). When designing a compensation plan, the company
The organization for which I am designing the compensation package is a company that offers internet solution to customers in the domestic US market and the global market. The position that I am hiring is that of a company secretary. The secretary will be required to work in the office of the human resource manager and will handle all the papered and paperless documentation. The position comes with numerous benefits and packages as outlined herein.
The study of Westerman et al (2009) finds that many organizations are seeking to find a competitive advantage and experimenting with new schemes of compensation, allowing them to act proactively in the changing world. Huselid (1995) notes that it has been shown that the application of appropriate human resource practices as recruitment and selection, performance evaluation and its relationship to incentives; reduce staff turnover and increase productivity. The systems design variable compensation in the form of incentives, is a critical factor to the success of organizations (Carlson et al, 2006) and found a direct and positive relationship with performance (Chang & Chen, 2002). Furthermore, Santone et al (1993) mention that many researchers found evidence of the important role played by the variable compensation to align the interests of employees with those of