Compensation and Benefits Management – Holland Enterprises
This paper discusses the role of a highly regarded human resource consultant who has been hired to review, analyze, and revise the compensation and benefit system utilized by Holland enterprises, the city’s largest employer. Of all the various human resource tools, many organizations have considered compensation as the most significant tool for managing and containing their employees. Therefore, by an organization ensuring that its compensation system does not stand separately from its other functions, it succeeds in obtaining the worth of its money as well as motivating and retaining the most talented and highly skilled employees (Berger, 2015). A large scale organization such as Holland Enterprise can only link its compensation to its inclusive strategies and goals only if it is necessary; otherwise it requires aligning its compensation with the strategy it embraces in its human resource. Besides, an organization requires being smart by conducting regular evaluation and planning of its performance appraisal and compensation systems. The reason behind this ideology is that compensation, being a visible tool as it is always, is an essential consideration to employees; therefore, consistent communication of clear message or information regarding the manner in which payment decisions are arrived at is a significant approach, which all organizations the size of Holland Enterprise should embrace.
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An effective compensation and benefits system can classify a large organization such as Holland enterprise an employer of choice. This is significant for assisting the organization attract the high skilled and talented employees. Such a group of employees look out for compensation that exceeds the monetary aspect, especially when considering the kind of stability, security and a future that a particular job can provide. Therefore, a well-thought-out compensation and benefits system is an essential strategy that can assist the organization increase its effectiveness through attracting the best talents. According to Sonia and Singh (2012), most organizations prefer embracing performance-based pay as an effective approach for increasing employee motivation. The basic consideration in this approach has always been that the compensation and benefit system should not only be limited financial rewards, but should extend consideration to other aspects of employment that can influence improved employee productivity. General improvement in the effectiveness and productivity of employee will lead to an increase in the overall effectiveness of the organization.
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Considering performance-based pay plans in the compensation and benefits system is essential. There are a number of performance-based pay plans Holland enterprises should consider in order to attract the best talents, improve employee productivity and the overall organizational effectiveness. The first performance-based pay plan that Holland requires considering and including in its compensation and benefits system is performance bonuses (American Animal Hospital Assn, 2012). To award such bonuses, Holland enterprises should rate the short term or long term performance of a particular department, a team of employees, an individual employees and base on such evaluations to award special bonuses. These bonuses should be given only upon exceptional performance and should be determined based on case-by-case consideration. Despite the effectiveness of performance bonuses, it would be necessary for an organization to exercise caution while embracing this approach. This is because there are no standard measures or frequencies for giving bonuses; therefore, in the event that there are no bonuses, employees should not raise any claim of favoritism. Employees who receive bonuses become motivated to improve their productivity thereby leading to improved organizational effectiveness.
The second performance-based pay plan that the organization should consider in its compensation and benefit system is profit sharing (American Animal Hospital Assn, 2012). This entails sharing a percentage of the profit of the organization among the whole team of employees. This approach increases and strengthens the connectedness between employees and the organization and by dividing financial rewards among them increases their motivation and productivity thereby increasing the overall organizational effectiveness. Holland Enterprises should, also, consider including skills-based rewards in its compensation and benefits system (Berger, 2015). In regard to this approach, the organization should reward employees depending on the level of their skills, especially if such skills are relevant to the job. Therefore, employees who choose to attend training sessions in order to improve their skills should be rewarded. The simple idea behind this approach is that employees who have more relevant skills are likely to more productive in their work. This will, in turn, lead to improved organizational effectiveness.
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The compensation and benefit system that a large organization such as Holland Enterprises requires embracing should include a number of components. The first component is compensation and benefit philosophy. In regard to compensation and benefit philosophy, the organization should embrace specific numbers. The philosophy of specific numbers suggests that an employee who does not have any experience requires earning a certain minimum salary during the first year and if during which time the employee proves to be productive, the salary should progressively be increased during each year (Martocchio, 2013). The second component is pay structure architecture (pay grades, pay ranges and pay width). In calculating the pay structure, it will be essential to consider essential components: pay grades, pay ranges and pay width. In terms of pay grades, an entry level employee should earn around 75-80% of the market rate (Martocchio, 2013). On the other hand, employees who have experience should earn 120-125% of the market rate (Martocchio, 2013). The organization can operationalize pay ranges through job ranking and leveling. This helps in establishing a measure of internal equity that would give employees an impression of fair treatment. In terms of the pay width, the organization should embrace a pay width of between 30-40% depending on what works for it (Martocchio, 2013). The ratio of base pay to incentive (bonus) pay is an essential component of a compensation and benefit system that Holland Enterprise should consider. These yearly incentive bonuses are given for purposes of improving employee motivation. They serve to reward employees for delivering impressive results.
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The fourth component of compensation and benefit system that Holland Enterprises requires considering is emphasis internal and external equity. The compensation plan must balance significant factors – labor costs and worker motivation (Berger, 2015). Internal equity entails fairness entails fairness in compensation to employees who perform similar work whereas external equity entails comparison with other pay structures that are equally competitive. In this regard, internal equity should give an impression of fairness, decreased exposure to discrimination, team structure and consistent standards. The fifth component of a compensation and benefit system that the organization should consider is the principle type of benefits such as vocation and sick leave, health insurance and deferred compensation match. In regard to health insurance, Holland Enterprise should provide employees with different health insurance plans for their choosing.
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In conclusion, it is essential for managers at Holland Enterprise to realize that, even though compensation is not the only factor that can determine employee retention, it can create a great deal of balance and calm in the organization. Besides salary and wages, it should be clear that benefits critically constitute a compensation package. A better compensation package is vital for helping an organization retain key employees and maximize their output. An effective compensation and benefits system can classify a large organization such as Holland enterprise an employer of choice. This is significant for assisting the organization attract the high skilled and talented employees. Such a group of employees look out for compensation that exceeds the monetary aspect, especially when considering the kind of stability, security and a future that a particular job can provide.Order Unique Answer Now