Compensation and Benefits Systems - Research Paper Example

Compensation and Benefit Systems Implemented by General Motors Company The main area of concern to any company is its staff. The best way by which a company can maintain its high caliber team of employees is dependent on its ability to cope with its staff and to recognize the individual’s contribution within the company. Effective performance management curriculum allows the company to perform well to the best of its ability by aligning goals of each individual employee with those of the company. When the company’s goals are matched, the company will better be able to compete effectively in the industry and boost morale of the employees when they are motivated. It is also a matter of fact that job satisfaction is key to the retention of an employee to his/her current job, particularly in the face of high salary provided in other companies. It is for this reason that the human resource function of many companies considers compensation and benefit systems as its integral part. The move is mainly driven by change in world economy, change in company due to market and legal forces, innovational needs and decisive thinking in order to be able to remain competitive. The type of compensation and benefit system that a company uses for compensating its staff can be valuable in the company’s efforts to gain competitive advantage and be able to achieve its missions and visions. A well organized incentive compensation plan has the effect of giving employees the feeling that the organization they are working for is fair. Employees also need to have a better understanding of their earning potential for them not to see those offered by other companies as attractive. General Motors, an American company that deals in the manufacture of automobiles is one such company that recognizes the value of compensation and benefits system to its employees. The company sells an average of 7.5 million vehicles yearly in over 120 countries across the globe (General Motors Corporation 6). The company is also estimated to employ over 209,000 employees whose salaries are dependent on job type. Locsin (1) reports that the company offers a final compensation to its employees based on the experience that an employee has acquired, his skills and certification. According to General Motors’s pay-scale report of December 2010, auto mechanics are projected to earn a mean salary of $18 per hour, assembly-line workers earn $29.49, journeymen electricians earn $31.47, and those doing assembling get $28.97 while millwrights get $30. Locsin cites that General Motors’s employees on salary get compensation worth $79,665 annually for mechanical engineers; $75,505 for industrial engineers, project engineers get a compensation of $83,182; mechanical design engineers getting $79,992; product development engineers being compensated $80,785 while manufacturing engineers getting $78, 683. This form of compensations is meant to motivate the employees in different department for them to increase their effort and remain loyal to the company (Locsin 1). The company also considers the experience that an employee has in compensating its workers. In this regard, an employee who has a lot of experience is being rewarded more compared with those who have not acquired a lot of experience. According to the General Motors Corporation’s pay scale of December 2010, new employees of the company earn $53,500 yearly, while those who have between one to four years of experience pocketing $64,160 (Locsin 1). He also reports that after an employee has worked for between five to nine years, these employees are considered with a reward. In this case, they get $75,043. Those who have served the company for between ten to nineteen years are awarded $82,480 yearly and those with more than twenty years of experience get $94,527. This kind of benefit was introduced as a way of increasing job satisfaction and retaining company’s employees with many years of experience. Locsin notes that compensation at General motors is also affected by an employee’s skills and specialties (1). In this regard, those employees who handle very sensitive areas within the company gets a higher compensation package compared with those that are under less sensitive areas. For instance, at general Motors, the highest paying job is the project management which pockets $88,626 annually to its necessity in coordinating the whole staff, materials in manufacturing process as well as the company budget. Those with vast skills in engineering department earn $84,435. This system the company attributes as one way of boosting the moral of its skilled staff, thus increasing job satisfaction (General Motors Corporation 23). Consequently, a worker who is satisfied and feels that his needs are being catered for by the company, tend to increase their efforts as has been the case with General Motors. General motors also base its compensation on a six sigma Greenbelt certification which bases the reward on the employee’s aptitude to analyze and decipher complex problems (General Motors Corporation 24). This is capable of making an employee earn an average salary of $89,250. A professional engineer who is certified earns an average of $89,889, while certified accountant earns $80,000. Those employees who have not been certified do not get such compensations according to General Motors Corporation (42). The company also provides a lot of benefits to its workers. One of the benefits offered by the company to its workers is the health and welfare. This is due to the fact that the company recognizes the value of safety for its workers which are key to retention. In this case, General Motors offer payments for injuries suffered and illness when the worker is on or off the job. For example when a worker gets injured while he or she is on duty, the General motors covers all the expenses incurred by the employee in treatment. These benefits are also included in the pay slip of the entire worker at General Motors (Berger and Berger 276). General motors also offer a fully paid leave allowance to its employees. The leave in this case entails vacation time or excused days from normal working days. This is to enable employees to have sometime to enjoy themselves and even to attend to their personal issues. General Motors considers this as a key component in increasing job satisfaction among its workers (Reilly and Estreicher 362). All the employees of general motors are also allowed to register with social security that offers retirement benefits once its employees leave work. In this case, General Motors effect deduction on all its employees and the money submitted to the social security administration on behalf of its employees. These contribution help General Motor retirees a great deal. A part from the social security benefits, General Motors also provides a retirement plan where payment may be made for work not yet done based on employment length (General Motors Corporation 12). General motors also recognize personal growth among its employees. In this case, the company through its human resource department offer training to its workers. This involves development of employee skills through on-or-off-the-job. Occasionally the company organizes career development seminars and workshops for its employees for coaching purposes and skill development. Other personal development benefits that General motors provide to its employees are performance management. This involves setting ongoing goals and development of feedback skills (General Motors Corporation 36). In conclusion, the key to retention of staff in a company depends on the company’s ability and commitment to motivate the workers. Moreover, for the company to have competitive advantage over others, it has to ensure that its employees are satisfied in all the departments. This can mainly be achieved by offering a compensation and benefit system in addition to improving working conditions. General Motors is one such company that has adopted this system for many years which has enable rank among the top auto mobile industries in the word with low employee turn over. This is attributed to the benefits it provides to its workers that increases job satisfaction. Work Cited Berger, Lance, A., & Berger, Dorothy, R. The compensation handbook: a state-of-the-art guide to Compensation strategy and Design. New York, NY: Mc Graw-Hill. 2000. Print. General Motors Corporation. General Motors Public Interest Report. New York, NY: General Motors. 1993. Print. Heneman, Robert, L., & Coyne, Erin, E. Implementing Total Rewards Strategies: A Guide to Planning and Implementing a total reward system. Shrm Foundation. 2007. Print. Locsin, Aurelio. The Average salary of a GM Worker. N.d. Web. 30 April, 2012 from http://www.ehow.com/info_7759346_average-salary-gm-worker.html. Reilly, David J. & Estreicher. Employee Benefits and Executive compensation. New York, NY: Kluwer Law International. 2010. Print. Read More