Alternative compensation systems to motivate employees (Essay Sample)

Alternative Compensation Systems to Motivate Employees
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Outline of the Paper
Thesis: Alternative Compensation Systems to Motivate Employees
Summary
Introduction
Compensation Management
Factors to consider when developing compensation plans
Employee Compensation Alternatives during Tough Times
Understanding Work Force Needs
Advantages of Compensation
Conclusion
Summary
Human resources are garnering significance all over the world and now organizations are taking notice of this. This is because human resource plays an important part in identifying talent and going ahead to develop it. Employee compensation is one of the most crucial components of the success of any business or organization that is under the domain of Human Resource. This paper describes how a manager can offer compensation packages in order to motivate his or her employees especially during trying times and ensure that the business successfully recovers as well as maintain its workforce. It precedes the full import of the necessity of maintaining an invigorated and motivated workforce for the sustenance of the operations of an organization based on an organization’s compensation plan.
Alternative Compensation Systems to Motivate Employees
Introduction
Compensation is done in monetary and/or non-monetary payment terms. This is given to an employee so as to appreciate the services he/she has done for the company satisfactorily, that is, in terms of time dedicated to the company, effort and skill, (Heathfield, 2013). It is also done on the basis of several considerations, for example, market research concerning the worth of other similar jobs in the market field. If an employee in some other company is getting a certain amount of compensation, another employee offering the same service for another company should have the same amount of compensation as the other employee, if not the same. Another issue that determines the amount of compensation is the contribution and the accomplishments that an employee does or already has done. An employee who has done much of accomplishments and has made notable contributions deserves more compensation.
Compensation Management
It is important for a business compensation structure to be given a lot of consideration. This is because this compensation structure is the one that reflects the true value of these employees, (Fogleman, 2004). Most managers are put to task when trying to come up with a good employee compensation plan. They tend to ask, “What do I have to give in terms of payment to have hardworking and loyal employees?” the manager, however, should reflect on what his/her compensation plan should say in itself.
Therefore, determining an appropriate employee compensation plan may be a sensitive topic. Thus every concern that is related to human resource needs to be addressed and most importantly having an understanding of the financial aspect of this employee compensation plan. Another mistake that managers may make is thinking that employee compensation is just the amount directly paid to an employee. The managers need to know that there are other costs that need to be included in the payroll of the employee.
Thus, an employee compensation plan should have the following strategy. Firstly, the plan should have incentives and bonuses which have clear guidelines. However, these incentives and bonuses should not be viewed as guaranteed payments but a measure of performance either by an individual, a team or a company. They should be given with regard to performance; otherwise they will not serve as motivating factors, (Newman, 2007).
The second factor to consider is to understand the costs of benefit plan before they are offered. Offering benefits is one good incentive for employees but they can be a burden in terms of costs to the company. If there are benefits to be added, consideration should be given in terms of long term expenses, not just direct costs for today. If there is an incentive to be added and it is not long term, then it should be omitted. This is because the act of adding and removing benefits will demoralize the employees.
The other point of consideration is calculating taxes of the employer’s payroll into the budget of the overall payroll. This is because employers incur several expenses including Medicare and social security tax, insurance for worker’s compensation and insurance for unemployment for state and federal entities.
Another point of consideration that has to be looked at is the position that the employee holds. If the employee is in any position that is related to sales, they should have commission that is part of their package as compensation. These types of compensation should be tied to performance so that it gives the company and the employee a win-win situation.
Lastly, it is the strategy for payroll budgeting. The payroll budget should include direct payments of wages and salaries; there should be commissions, bonuses and incentives, payroll taxes as well as insurance. Costs that the business incurs should be also included in the payroll. These suggestions should serve as a blueprint to alternative compensation packages for employees, often during normal circumstances. However, what would happen to the company’s compensation system during hard times? As a manager, one needs to ensure that his/her employees are well remunerated regardless of time or season.
Employee Compensation Alternatives during Tough Times
Herubudiarto (2011) argues that during a recession, for example, keeping employees willing to work includes more than just declaring bonuses or increasing their salaries. He goes on to describe some fundamental steps that need to be taken in order to keep employees comfortable in their work environments. The steps proposed thus include understanding the workforce’s needs, predicaments and fears, active engagement with the employees through constant communications, building of commitments with the employees, and arranging for expert workshops with the workforce (Herubudiarto, 2011).
Understanding Work Force Needs
The concept of employee compensation is a result of long years of research and trials on various organizations and organizational framework. This paper brings the perspective of employee understanding and the treatment of the working environment as a social environment where information is exchanged informally through individual interactions in corridors and through rumors (Herubudiarto, 2011). This perspective allows managers and directors to understand the origin of much of the employee fears and worries and therefore deal with them appropriately. For instance, rumors can affect the performance of an employee during a recession even if the employee is paid well. The understanding of this fact requires the understanding of the implications of lack of proper communication channels and the close interaction of employees with their employers in order to ensure their confidence is intact for the purpose of co...