Compensation and Benefit Packages offered in a Corporate Environment
The purpose of this paper is to focus on the compensation and benefits packages offered to new and existing employees in the firm "Teamwork Packages" which is a small private firm. We take up the role of the head of Human Resource department and it is our responsibility to develop a new compensation and benefits package which can enhance recruiting and retention of our company with the strategic objective of increasing the production levels by more than twenty five percent in the next half decade.
We will discuss many sorts of compensation practices and benefits packages which are offered by any firm. Since our firm Teamwork packages has recently applied a new Human Resource structure, it is the responsibility given to this department by the senior management in evolving the growth, future prospects of the firm by analyzing other firms and business practices around it and give out a brief and precise conclusion regarding the topic which can help the firm. Since the firm faces competition on many fronts, therefore it is also necessary to have a keen eye on the practices of its competitors and observe their business functions as well. Now, let's have a review of current practices as well as of the strategic plans for change that can ensure success in recruiting, retention and on other aspects.
Review of Practices like Compensation structure in the firm
Money is regarded as one of most important and foremost issues the upcoming employees focus on, it is very important for the firms to offer the right type of monetary package to the employees which can be straight basic salary or any structure based on incentives. Let's have a detailed look on how these systems works then focus on the compensation structure. The standard base pay program gives predefined salary options to every employee or upcoming successful employee candidates. The firm should install minimum as well as maximum levels within the defined pay ranges which can measure up for different variations in skill and experience levels.
While setting up the main base pay structure, it is important to determine the overall competition which is surrounding the firm, this can greatly influence the employees working on the firm. The pay levels should be competitive otherwise the firm might risk losing its skilled and experienced employees. Proper research should be done in finding out the salary levels according to current industry standards which is based on specific types of jobs located at specific types of geographic areas. Once the firm's base pay structure places itself firmly then a merit pay program should be set up which can offer employees salary ranges according to their respective positions depending on their performance-driven speed. All this is applicable when the management applies the practice of annual performance review for its employees.
There is a drawback to this as well which can be that employees come under the impression that they will be offered increment in salaries only after evaluation period, this can cause the seizure in their motivation of performing better at their jobs. This is why most firms go for an Incentive Compensation system.
The Incentive-based compensation recently is showing to be more common among firms since it emphasizes more on performance as well as competition for the talented personnel. This system greatly helps in motivating the employees to do well at their jobs. "The proper set up of incentive-based compensation system demands comprehensive research and study just like that which is at base pay program." (Roomkin, 1989).
Types of Compensation
The bonuses offered by the firm should rely on achievement of every employee. This program should not be limited only to a certain degree or types of employees because by limiting it the firm risks limiting its optimum potential. Also, the limits let it lose the main advantages of team building in the incentive-based compensation. Here, it should be noted that if every person is chasing at the same goal then everyone including all the employees, the management and the firm has a better chance in achieving success.
The rewards offered should be according to the results and not according to the activity of employees, since trying does not mean they will get a decent result and bonuses are deserved by those employees who get the most decent results. It is important for the firm not to limit its total amount of bonuses offered, this can greatly limit the efforts being put by the employees at their respective tasks since if they reach a limit then they might feel of taking everything easy from then on.
By connecting the compensation of employees with their provided results helps them focus more at the firm's bottom line. "The management should also try to bring long-term compensation which can vary in different forms like stock options or the deferred compensation plans." (Zhu, 2005). These plans help employees greatly in motivation and on other different factors.
If a firm has sales staff, then it is better to have a pay structure which is based on incentives since it almost always guarantees great outcomes and results as compared to straight pay system. "The placement of command-based pay system at the sales staff can greatly affect the sales numbers." (Kulik, 2004). If the income of employed personnel is connected directly with their overall performance without the placement of any ceiling then the obvious conclusion here is that only sky can be the limit for these personnel.
Any firm with talented sales staff have the advantage of thriving in this sort of environment. It is also easy here for the management to check on which of its employees are being more productive and which are not, or which are in need for more sales training.
Some disadvantages also exist for the commission-based payment structure in relation with the sales staff. Here, in many cases employees may put their efforts completely in gaining more sales for themselves on the products which can provide them the greatest return and may bypass on the actual desires and needs of the customer.
The customer service can suffer greatly in this whole process as well. Here, it is advised that employees should keep a good combination regarding the factors of base salary and the overall sales commission. It is advised to keep the base salary sufficient enough to lure in good candidates but this should not be that good which can get the reps satisfied by the offered base amount even when no sales are made.
The management should always remember that their type of business always plays a great part in determining overall kinds of pay structures that they may give to their sales staff. If the management gives a single product which has relatively few variations then structure such as the straight commission can work.
If the management offers several products or several services or maybe some combination regarding the products and services then the sales approach which should be taken here may need more relationship building techniques, it may also need continued customer service in case the sales employees need to make any more additional sales in their already existing customer base. Here, the base salary can be regarded as being more important. This type of pay structure has the property of evolving over time, i.e. If there is some problem with anything then it can be adjusted.
Besides the common benefits packages which include things like health insurance, different plans such as retirement and vacations and others should be focused upon, the employees when choosing a firm always seem to be looking for those firms that give out more things which can be valued by them. Here employees seek to balance their lives with equal amount of perks compared with their job stress. Due to this, different kinds of benefits such as flexible schedules, relaxed working environment and others are becoming more and more important, some even compare these benefits to the regular salaries offered.
According to many recent surveys, some ninety percent of employees said that their balance between work and family life is very much important. These other rewards, facilities also has a huge impact on the way employees feel regarding their management or the firm in which they work at. "More benefits mean more perks for employees which can help retain or keep those employees which might otherwise leave for more lucrative offers elsewhere." (Sullivan 2001).
"It should be noted that the departure of skilled and experienced personnel can greatly damage the firm's image and its ability in performing its tasks." (Tropman, 2001). These personnel can even go to a rival firm and help them as well.
If any firm offers great benefits, then it is easy for it to hire more talented employees which can greatly impact the firms overall ambitions such as its marketing, sales and so on. Here are some of the main benefits which a firm…