Recognizing Employee Contributions - Essay Example

Recognizing Employee Contributions of the of the Introduction This study will focuson different approaches that are implemented by an organization so as to enhance performance level of employees. Human resource management is regarded as one of the critical organizational activities. There are various procedures through which team members can be managed and their interests be addressed. Employees usually contribute towards growth and success of an organization. These contributions have to be recognized appropriately as it helps in motivating team members. Benefit plans are designed by an organization in order to fulfill needs and wants of employees. Every firm develops a specific structure of compensation and benefits. Incentive pay is an integral part of benefits being offered to employees. In this particular study views and opinions will be given to a new retail company so as to retain its talented base of employees. Team members tend to leave an organization when they are not satisfied with organizational environment or their compensation structure. It is major responsibility of HR manager to continuously modify compensation framework in order to deliver the best benefits to employees. Workforce can be motivated either through monetary rewards or non-monetary appreciation. This study outlines current scenario of a retail company that is into internet sales as well as has retail outlets. Employee survey in the firm has revealed that employees are not satisfied with compensation system and are leaving jobs. In this study different approaches would be highlighted that can help to retain employees and facilitate developing appropriate compensation system. Discussion Two methods of incentive pay Incentive pay is essential for retaining employees within the system. Pay can be defined as the first reward that is given to managers or employees. Incentives are additional benefits given to employees so as to motivate them for undertaking new challenges. Pay can be classified into three segments such as basic pay, pay for performance and merit pay. Basic pay occupies the main portion of compensation and is referred to as hourly wage or salary. Merit pay is totally based on predetermined criteria. On the other hand, pay for performance can be defined as incentive pay system. Rewards are given to distinguish between competencies possessed by team members and their respective contributions towards firm’s overall success. There are certain new pay techniques that can be adopted by the retail company so as to retain its employee base. Amongst all the techniques two mechanisms are most suitable in the given situation such as rewarding new goals and rewarding leadership roles. Rewarding new goals is an innovative incentive plan that is associated with abilities possessed by employees. This incentive pay system recognizes those employees who succeed towards achieving specific goals other than core goals of profits and sales (Mejia, Balkin and Rober, 2006). These goals can be gaining high standards in customer satisfaction or improving on total productivity. The principle factor behind this incentive pay system is to constantly motivate every team member in order to deliver outstanding performance. Rewarding new goals even helps in improving firm’s performance since competitive advantage can be gained by a firm. Rewarding leadership roles is related to leadership ability of managers. This mechanism is based on employee satisfaction and manager’s ability to deliver desired results. However the major principle behind this approach is encouraging leaders or managers to perform exceptionally and align their team members towards organizational goals. It even facilitates collaborative work style between managers and employees. Core legal requirements Employers develop a benefit plan for their employees. There are certain legal requirements that greatly affect employee benefits. Many of these benefits are subjected to strict norms and regulations such as employee retirement income security act (ERISA), internal revenue code, etc. The main employee benefits which are offered by every organization are sick leave, paid holiday and vacation, dental, medical or vision insurance, cafeteria plans, severance packages, retirement plans, employee assistance programs, life insurance, disability insurance and telecommuting. There are some core legal requirements known as legally mandated benefits that should be offered by employers. ERISA or Employment Retirement Income Security Act states the first major benefit which should be given to employees. This regulation indicates that retirement plan or insurance plan has to be offered to employees. ERISA also encompasses welfare and retirement benefit plans (Bamberger and Meshoulam, 2005). Welfare plans mainly outlines disability, health or life benefits. Apart from retirement benefits medical plans also needs to be structured for employees. This gives employees health coverage during their job tenure and even provides similar facilities to their family members. Other benefits which are strongly associated with legal norms are leaves or paid holidays. Every team member is eligible for holiday and employers should provide a well structured holiday list to all employees. Three additional benefits Employee benefits are basically observed to be of certain types such as medical coverage, retirement benefits and paid holidays or leaves. However there are three other benefits which can effectively be implemented by the retail company. They are long term care insurance, child care subsidy and telecommuting. These benefits are normally not provided by employers but it might prove to be successful in terms of retaining talented employee base. Child care subsidy will enable employees to rely on the organization for long term. This is because subsidy for building future of their children will be provided by the firm. On the other hand, it shall even establish a strong bond between employer and employee. Child care subsidy would not be beneficial for all employees but can help to motivate highly skilled employees. Long term care insurance takes into account health and mental conditions of employees. It helps to safeguard future life of employees. This type of additional benefit can prove to be an added advantage for firms in relation to competitors. The contribution of employees towards firm’s growth can be appreciated only by providing long term benefits. Telecommuting is another benefit which can be offered by employers. Telecommuting can be stated as a work arrangement where employees do not have to commute to any central location of workplace. On basis of this additional benefit telecommuters can effectively work from home. Employees having any form of disability can work from any other locations. Work from home enables an employee to deliver required results without compromising on any conditions. Important concepts for benefit plans Benefit plans are usually designed by an organization in order to retain employees or to motivate them to perform well. In highly competitive business environment it is essential to frame a strategy that can initiate high productivity. Benefit plans for a new retail company should encompass retirement policies, health facilities, insurance, etc. However there are some concepts which are behind development of these plans. Firstly is the cost factor, as benefits being offered to employees constitute a particular cost. This cost has to be initially analyzed by a firm in order to offer suitable benefits. The main goal of any organization is to secure high profit margins and this can be achieved when overall costs is controlled. Cost-benefit analysis is one of the concepts that will be taken into consideration by the retail firm. Productivity of employees shall be plotted against cost in order to determine the end result. Those benefits have to be incorporated within the plan which constitutes least cost and is beneficial for organization as well as employees. Motivation is another conceptual framework that needs to be incorporated within the benefit plan. There are two main segments of motivation known as monetary reward scheme and non-monetary scheme (Gottlieb, 2003). This concept would outline which of the following benefits is most suitable for employees. Benefit plan has to be designed in such manner that it helps to enhance motivational level of employees. It should not only encompass current benefits of employees but need to consider even long term facilities. These two concepts are must consider factors in benefit plan structured by HR professionals. Assessment of communication technique’s efficiency Communication techniques comprise of certain vital components like message to be conveyed and target audience. Compensation and benefit plans have to be conveyed to employees. There are wide ranges of communication techniques which can be implemented in order to transmit message to target audience. Communication targets are mainly managers, professionals, union employees, hourly workers and other employee segments. The most common communication techniques are technology based, face-to-face and paper based mechanisms. All these three segments consist of some advantages and disadvantages. Face-to-face communication technique can be defined as meetings, workshops and presentations. Communication is delivered from a trusted source and comprise of both verbal and non-verbal communication. This technique is efficient since it is a real time interaction between managers and employees. The major motive is to convey the compensation structure and benefit plan effectively. Face-to-face interaction helps in resolving any issues related to benefit plan efficiently. Paper based communication techniques encompass newsletters, brochures, letters, memos and booklets. This method has its efficiency such as the plan can be read at its own pace, consistency can be maintained and might be referred or shared with other team members. When the benefit plan is communicated through written format it provides an opportunity to employees to go through the entire plan. Technology based communication channel is basically adopted by organizations for communicating compensation framework. These channels are websites, podcasts, CD-ROMS, portals, emails, kiosks, video conferencing and webcasts (Srinath, 2009). This communication medium delivers message conveniently, quickly and in a cost effective way. It even facilitates conveying time-sensitive information and employees can easily access or search data as and when required. Ethical risks Incentive pay helps to motivate employees but making it a major part of compensation system can give rise to ethical risks. First risk is associated with behavior of employees since incentives tend to make them self-centered. It can be stated that incentives increases level of performance of employees but it even reduces interpersonal relationship amongst team members. On broader context incentives disrupt the bond which is present within employees in an organization. Higher incentive pay make employees’ money oriented and they are no more inclined towards team work. Lack of collaborative work often results into workplace conflict. On the other hand indirect means can be undertaken by employees so as to reach set objectives and gain more incentive pay. Incentives being offered should be low as it greatly affects relationship between team members (Luthans, 2005). Group performance is negligible when main focus is on earning high incentives. Another ethical issue is that of discrimination amongst team members. When incentive pay is considered as a major percentage of compensation then employers are more concerned with evaluating performance of employees and giving them incentives. This tends to make weak employees feel inferior since their skills or knowledge is not improved by team leaders. It results into discrimination amongst employees which is not a favorable condition to occur within an organization. This is a major ethical risk because money disrupts harmony present in a firm and builds up rivalry. These risks can be prevented by eliminating incentive pay as a major percentage of benefit plans. Recommendations for mitigating risk The two risks that have been identified are from employee perspective and employer perspective. In order to eradicate such risks management should prevent any form of fierce competition within the system. Main focus needs to be on group performance rather than individual performance. The first risk states that money oriented behavior of an individual disrupts friendly organizational environment. This risk can be effectively mitigated by offering huge incentives to the group rather than an individual. Group performance will develop interpersonal relationship amongst team members and a common goal can be set. On the other hand, self-centered approach can be transformed into collaborative approach where all team members work towards a common goal. Group incentives shall even result into knowledge and skill sharing amongst employees. It is the most suitable way to address the risk linked with violating workplace environment. The other ethical risk of discrimination can be mitigated by allocating a certain section of incentive pay for improved performance. This can help to enhance performance level of those workers who were previously not eligible for any form of incentive pay. Employers can work in collaboration with team members in order to determine number of poor performers and arrange for them suitable training and development sessions. During these sessions weak performers can improve upon their skill set or knowledge base and later apply them on real time scenarios. Their improved performance will be later reviewed by employers and incentives shall be provided on basis of such review. Hence there would be no discrimination amongst best or weak performers due to high incentive pay. Conclusion As per this study employee contributions need to be recognized efficiently by employers. This in turn helps to increase motivational level of employees and drive them towards common organizational goal. There are different ways through which employees can be motivated or encouraged to perform better. However in this study compensation and benefit plans for employees have been outlined. Compensation comprises of different pay sections such as performance based pay, basic pay and merit pay. Basic pay is referred to as salary or hourly wages which is offered to employees. On the other hand performance based pay denotes additional payment that is given to employees on the basis of their exceptional performance. It can be stated that best approach to encourage employees is through performance based incentives. Incentive pay forms a vital component of compensation system and is offered by every organization in real world. Benefit scheme for employees comprise of wide set of guidelines such as retirement benefits, medical coverage, health benefits, insurance, paid leaves, etc. These benefit plans are usually communicated through face-to-face, technology based or paper based communication medium. There are ethical risks associated with incentive pay which can be mitigated by adopting best practices. References Bamberger, P., and Meshoulam, I. (2005). Human Resource Management Strategy. Thousand Oaks, CA: Sage. Gottlieb, M.R. (2003). Managing Group Process. USA: Greenwood Publishing Group. Luthans, F. (2005). Organizational Behaviour (Tenth Edition). United States: McGraw Hill Irwin. Mejia, G., Balkin, D., and Rober, C. (2006). Managing Human Resources (Fourth Edition). India: Dorling Kidersley Pvt. Ltd. Srinath, T.T. (2009). Team Development and Team Effectiveness. Hyderabad : ICFAI Book. Read More