Compensation and Benefits Plan
Hence, designing and managing a fair, competitive pay structure without endangering the financial standing of the firm is very important. The objective of this paper is to propose a fair, competitive compensation and benefits package that meet the demands of an employee and the needs of the organization he or she works for. Team A used Salary. com to design an adequate compensation and benefits plan proposal for a service area manager position. Overview of Salary. com A job search is not complete without knowing the compensation and benefits that come with the job.
To research a Service Area Manager’s worth in the labor market, one can research on several websites that provide comparable compensation and benefits ranges information for the job position searched. Salary. com is one of those websites. According to the Salary. com website (2013). “The Salary. com methodology is a state-of-the-art process for benchmarking and analyzing jobs that builds on professional industry standards” (para. 3). Many people consider Salary. com the best website for job-seekers and current employees to research basic salary information. The information provided by Salary. om gives the user a real-time snapshot of the general salary ranges for the position searched. The website also provides a benefits calculator and a cost of living wizard to use to get a closer look at similar benefits offered by organizations in various locations. Salary. com allows users access to its extensive compensation and benefits database and the use of its tool free of charge. For example, under Salary Wizard, users can calculate the annual value of benefit using the benefits calculator. However, to get a more in-debt assessment salary. com recommends using its paid version of the site.
The paid version of the site gives the employee a concentrated written report of salary information in relation to others in the exact position within the same geographical area. Access to this type of information can be extremely important in negotiating salaries. The website provides several research tools that can be very helpful to the employees and the employers. Pay Structure Proposal Firms use competitive pay to ensure they have the talents needed to achieve organizational goals. Consequently, compensation is an essential component of employer-employee relationship.
Based on the job description and job specification for service area manager, Team A proposed a compensation system that offers a market-based pay, bonuses, and fringe benefits. Today, majority of organizations prefer market-based pay structure. PR Newswire (2012) quoted Kerry Chou, a Certified Compensation Professional and a practice leader at WorldatWork stating, “Market-based structures have struck a chord with organizations because they combine the more well-defined parameters of a traditional structure with the range spread flexibility of broad bands” (para. 2).
In this pay structure, employers can make a job position pay level more or less competitive depending on the firm’s compensation philosophy or position. The service area manager salary range is comparable with the other companies’ pay structure. Accordingly, aside from the candidate’s skills and abilities, his or her work experience and education were considered in the salary structure. In addition to the base salary, the team proposed to offer incentive programs, such as bonuses to reward and recognize employees for excellent or exceptional performances in achieving company goals.
Aligning compensation packages to the objectives and strategies of an organization is essential. Obstacles and Resistance Cascio (2010) stated that establishing a pay structure is a complex process. One issue in designing compensation package is offering a different compensation package to employees in similar positions within the company. Although individual compensation package is confidential, employees are not always secretive concerning pay. Cascio (2010) stated that pay secrecy is a difficult policy to keep; one can easily learn what the position is worth in the job-market through the Internet.
Usually, when workers know that they are not paid equally for doing the same job, resentment and conflict may occur, which may result in decreased employee morale, which can ultimately affect employee performance and productivity. In addition, unfair business practice may expose the company to some potential legal issues. For example, if the firm decides to hire a man and a woman for the same position and if the firm offers the woman a lesser compensation than the male employee, she may complain for pay discrimination. Hence, it is essential to design compensation packages that comply with the laws of employment.
In addition, the service area manager role is a new position within the store organization structure and will move a group of leaders from hourly compensation to a fixed salary compensation structure more weighted in bonus than the prior pay structure. The new service area manager team will have significant influence on the financial performance of the business which will enable the team to control the variable portion of the compensation. In this situation, there are several likely obstacles to the acceptance of the compensation structure.
First, the new managers moving from hourly to salaried compensation are likely to focus on the hourly value of the compensation rather than the potential income value, including incentives. Second, the new managers are used to a much smaller part of total compensation tied to financial performance and may have difficulty understanding how much the new role increases his or her influence over the financial results. To prevent resistance, management must communicate effectively the value of benefits to the employees to ensure that they understand their total compensation package value.
Additionally, firms must pay and promote employees for productivity only; high performing employees must receive rewards and recognition. Supervisors and leaders must make distinction among workers properly. If the new team can embrace the potential income value and career growth offered for the new position, resistance will fade quickly. Conclusion Designing a strong, fair compensation package that meets the needs and values of the employees can increase employee morale and improve employee and organizational performance.
A well-designed compensation package promotes not only a positive working relationship between employers and employees but also promotes good business practices; that is firms’ care for their employees more than just the work they contribute to the organization. A fair, adequate compensation package requires balancing employees’ interests and expectations with the means and costs of the employer. In other words, both employers and employees together with their families win when pay and incentive policies are well-thought-out. ? References Anonymous. (2012, November).