Human Resources - The Concept of Total Compensation - Case Study Example

? Human resources Total Compensation The concept of Total Compensation relates to the amount of Total Cost incurred by the firm relating to staffing an individual person in a specific department. Herein the level of Total Costs includes the full compensation package that includes both the financial compensation in the form of wages and salaries and also other financial and non-financial benefits like training and bonuses rendered. Thus, the firm is required to rightly inform the people about the breakup of the Total Compensation plan during their appointment and also render annual reports (Baschab and Piot, 2004, p. 226). The Total Compensation practice at Lincoln Electric Company comprises of both ‘Basic Wages’ and ‘Bonuses’ rendered. The wage rates of the people marked on an industry-average basis are evaluated in terms of piece-rate system relating more to the Production workers where pieces produced by each individual are noted. Basic Workers are also rendered yearly bonuses that also depend on their merit or performance rates. The compensation program of Lincoln Electric can be enhanced through introduction of non-financial benefits like Training and Job Recognition programs and yearly Compensation Cost attributed likewise is furnished to employees (The Lincoln Electric Company, n.d., p. 569-570). Compensation package of Southwest Airlines is however found to comprise of a basic pay which is below the industry average. Additions are rendered to Basic Wages in the form of Profit and Stock Sharing endeavors where employees are rendered a part of the company’s yearly profits along with encouraging them to purchase shares of the concern. The people procure shares through allocation of profits or through a deduction in their pays. Other performance recognition and reward programs are also generated financial or non-financial in nature to enhance the Total Compensation Package. The senior people are devoid from gaining of perks and membership benefits availed by others in the industry. Moreover, the salaries of the Managers are frozen and not evaluated on merit basis. Thus though the Total Compensation scheme of Southwest Airlines comprises of several cost related components yet it fails to match the industry standards (Southwest Airlines, n.d., p. 586-587). Benefits and Services The Benefits and Services rendered should be properly planned and executed by the organization to match the demands and aspirations of the employees through the process of employee surveys. Innovation must be rendered to as to the type and range of benefits and enhancement would be rendered through comparison based on industry standards. In the process of surveys and decision-making ventures related to benefit planning both the employees and the union bodies must be taken into consideration. Finally having decided on the benefits based on the cost structure it must be adequately communicated to the beneficiaries to help them optimize and gain on present and future opportunities (Sims, 2007, p.484-485). Range of benefits and services rendered to the staffs in Lincoln Electric contain both financial and non-financial categories. In financial category benefits related to medical insurance and retirement financing schemes are on the cards. Non-financial benefits consist of meals obtained from the office cafeteria at concessional or discounted rates. Again the employees receive insurance for disability or accidental reasons from the Employee Association body. The company also renders right to older employees to procure stocks of the company wherein they gain on dividends same like the external shareholders. However the executives of the company are devoid of other perks like parking facilities and reserved washrooms and eating zones (The Lincoln Electric Company, n.d., p. 571-572). Southwest Airlines is also found to render a host of benefits to the employees both financial and non-financial in nature. The financial benefits that consist of a range of insurance benefits related to medical, life, disability, mental needs and others are fully funded by the company for both part and full time employees. In addition to holding parties other non-financial benefits relate to encouraging the employees along with their families gain free or discounted flights. The airlines company also renders financial and other assistance to the employees in times of need. The management body of Southwest focuses on conducting effective surveys of the employees to understand their needs and thereby bring about innovations in the benefits rendered (Southwest Airlines, n.d., p. 587). Thus relating to the concept of benefits underlined above, Southwest Airlines reflects a more pragmatic and reasonable position in comparison to Lincoln Electric. Unionization The concept of Unionization holds good pertaining to the formation of a unified body of the employees wherein the people can fight for enhancement of their individual rights pertaining to increment in wages and salaries or betterment in working conditions to state a few. The Unionized body of employees selects representatives that along with the people collectively bargain for rights and abolishment of unfair and biased actions rendered. Contracts signed with the labor unions are subjected to review and renewal to further enhance its effectiveness (International Union of Operating Engineers, 2010). Workers’ or Employees’ Union formation earns due consideration from the management body of Lincoln Electric Company. Observation made reflects that the management of the company and also the Chief Executive Officer has made several efforts in organizing the employees of the concern. The higher authorities of the company felt the need for collective representation of rights, needs and grievances of the employees through the process of Unionization (The Lincoln Electric Company, n.d., p. 562). Like Lincoln Electric, the management body of Southwest Airlines reflects an enhanced understanding and appreciation for the existence of Unionized Employee bodies. The employee unions in Southwest Airlines helps the people gain the enhancement of benefits and pay-scales through the collective bargaining process. Observation shows that the contracts signed in by the management of Southwest Airlines with the employee unions range around a decade catering for the mutual welfare of the company and its people. These contracts are again subjected to renewal after conducting a review of employee needs after the completion of the contract period (Southwest Airlines, n.d., p. 586). Recruiting and Selection The concept of recruitment and selection earns relevance pertaining to the process of employment of the right personnel in business and other organizations. Recruitment process is taken as a positive minded initiative taken for head-hunting prospective personnel for fulfilling the vacancies in the company through advertising in internet and popular publications. Selection process is perceived as negative for it tends to conduct screening of the range of candidates obtained for effectively fulfilling the vacancies enlisted. Tests and screening activities are formulated based on selection criteria planned in advance that focus on matching individual competencies to employment objectives of the company (Cornelius, 2001, p.36). The recruitment and selection process in Lincoln Electric Company is clearly defined such that the management advertises for the vacancies in company bulletins. This process mainly focuses on internal recruitments such that a selection criteria based on interviews is formulated for the internal recruits. Interview is held by the Supervisors of the specific departments along with the company Vice President through Final Selection rests on the hand of the Supervisor. Recruitment and selection criteria for external recruits are also specified pertaining only to the entry-level positions and incorporate aptitude and psychological tests (The Lincoln Electric Company, n.d., p. 569). Recruitment and Selection process in Southwest Airlines reflects a more in-depth focus where considerable amount of investments are rendered by the company to effectively advertise the vacancies and thereby gain the right labor force. Further an effective selection criterion is formulated that focuses more designing rating scales to rank the personnel in terms of specific traits like humor, self-confidence, team building capacity and others. In addition to the rating test interviews and recalling the conversational effectiveness of the interviewees are also incorporated to enhance the Selection drive in the concern (Southwest Airlines, n.d., p. 583-585). Performance Management Performance Management is the process through which the performances of individual are rated based on set standards such that effective feedback is rendered to them for improvement of their productivity and skill sets. Effective monitoring of the performances of the individuals renders in proper accomplishment of organizational objectives. Performance Appraisal involves the use of Ranking or Rating Scales such that individual performances are evaluated based on performances of colleagues or in relation to specific standards respectively (Griffin, 2011, p.235-236). The Performance Evaluation process practiced at Lincoln Electric Company involves the incorporation of different graphic rating scales for the non-managerial and managerial type of personnel. The scales rate the personnel on both qualitative and quantitative parameters such that behavioral traits along with outputs generated are evaluated to generate effective feedback on the scores obtained. Traits evaluated for both the non-managerial and managerial personnel focus on the individual potential of generating ideas and innovations considered effective for the concern (The Lincoln Electric Company, n.d., p. 569). Performance Evaluation Methods practiced at Southwest Airlines reflect enhanced focus of the management on the ambit of customer service. Ratings are rendered by supervisors mainly on the performances of the individual to render the best possible customer service. The performance evaluation method in the airlines company renders more significance to the aspect of mutual cooperation and team learning to help accomplish organizational goals (Southwest Airlines, n.d., p. 587). However the broader perspective held in performance rating ventures in the airlines company is amenable to errors for it tends to involve the element of biasness. Absence of rating scales makes the process unscientific in nature and again no divisions are made for managerial and other employees as in Lincoln Electric. Training and Development Training and Development functions form the core of employee development processes in organizations such that the organizational managers render key investments and resources to enhance the effectiveness of the training pursuits. Training and development is conducted both on-the-job and off-the-job mode where on-the-job training is pursued in a frequent manner while off-the-job training is rendered in the form of induction training or in certain specific intervals to enhance the individual’s understanding of the work atmosphere. Feedback is gained from the participants to enhance the effectiveness of the process (Dessler and Varkkey, 2008, p.314-315). Lincoln Electric Company focuses more on the ambit of rendering on-the-job training both for production and sales personnel. Even the new recruits are subjected to on-the-job training to adapt their performance style based on organizational needs. Off-the-Job training is not considered a requisite for it is perceived as not fit for all (The Lincoln Electric Company, n.d., p. 571). In contrast to Lincoln Electric Company the training modules practiced in Southwest Airlines focus on integrating the parameters of both off-the-job and on-the-job training. The airlines company has an indigenous school that trains the new entrants to rightly adapt the organizational culture. More so the professional and personal competencies of the people are developed in the school and then they are subjected to 2-3 weeks on-the-job training. Again the training program is designed specifically for employees and managers. Managers in the airlines company are rather trained to enhance their business leadership skills (Southwest Airlines, n.d., p. 585). . The above comparison reflects that training practices in Southwest Airlines are more efficient and relevant in developing effectiveness of personnel to deliver enhanced competencies. References Baschab, J., & Piot, J. (2004). The professional services firm Bible. New Jersey: John Wiley & Sons. Cornelius, N. (2001). Human resource management: A managerial perspective. United Kingdom: Cengage Learning EMEA. Dessler, G., & Varkkey, B. (2008). Human resource management, 11/e. New Delhi: Pearson Education India. Griffin, R.W. (2011). Fundamentals of management. United States: Cengage Learning. International Union of Operating Engineers. (2010). Frequently asked questions about unions. Retrieved from http://www.iuoe.org/Home/AboutIUOE/UnionFAQs/tabid/73/Default.aspx Sims, R. R. (2007). Human resource management: Contemporary issues, challenges, and opportunities. United States of America: IAP. Southwest Airlines. (n.d.). Integrative case study: Southwest Airlines. The Lincoln Electric Company. (n.d.). Integrative case study: The Lincoln Electric Company. Read More