Provide three examples from the reading of how employee compensation can impact the success of a company.

Consider the information provided in the Activity “Goals of a Compensation Plan.” Provide three examples from the reading of how employee compensation can impact the success of a company. Then, after viewing the list in the Activity, “Top Companies for Compensation and Benefits,” what is the most important part of a compensation package to you in your career and why? What are some alternative types of compensation, not listed in the reading, that you would like to have offered at your job? Please explain.

Top Companies for Compensation and Benefits,

Take a look at Glassdoor’s ranking of the top 25 companies to work for in terms of compensation and benefits. Read the list then complete the Discussion Board below.

https://www.glassdoor.com/Explore/top-companies-co…

Requirements: 150 TO 400 WORDS

GOALS OF A COMPENSATION PLAN

Goals of a Compensation Plan

Introduction

As you move on to other competencies in this program, you will need to consider how employee compensation impacts the success of a company. This section discusses some of the basics of compensation plans. As you read, consider what is most important to ensure that employees and employers are satisfied.

Compensation and Benefits

Matching Compensation With Core Values

Imagine that as you sit down to review the compensation package your company offers, one thing that stands out is that your compensation package no longer matches the core values of your organization. When your organization merged five years ago with a similar firm that specializes in online shoe retailing, your company had to hire hundreds of people to keep up with growth. As a result—and what happens with many companies—the compensation plans are not revised and revisited as they should be. The core values your company adopted from the merging company focused on customer service, freedom to work where employees felt they could be most productive, and continuing education of employees, whether or not the education was related to the organization. The compensation package, providing the basic salary, health benefits, and 401(k) plans, seems a bit old-fashioned for the type of company yours has become.

After reviewing your company’s strategic plan and your human resource management (HRM) strategic plan, you begin to develop a compensation plan that includes salary, health benefits, and 401(k) plans, but you feel it might be smart to better meet the needs of your employees by making some changes to these existing plans. For example, you are considering implementing a team bonus program for high customer service ratings and coverage for alternative forms of medicine, such as acupuncture and massage. Instead of guessing what employees would like to see in their compensation packages, you decide to develop a compensation survey to assess what benefits are most important to your employees. As you begin this task, you know it will be a lot of work, but it’s important to the continued recruitment, retention, and motivation of your current employees.

Compensation and Benefits Introduction

Goals of a Compensation Plan

After strategic plan development and the recruitment and selection process, the next aspect of HRM is to develop compensation plans that will help in the recruitment and retention of employees.

The goal of a compensation plan is not only to attract people but also to retain them.© Stockbyte/Thinkstock

Most of us, no matter how much we like our jobs, would not do them without a compensation package. When we think of compensation, often we think of only our paycheck, but compensation in terms of HRM is much broader. A compensation package can include pay, healthcare benefits, and other benefits such as 401(k) plans, which will all be discussed in this chapter. Before we discuss specifics, you should be aware of courses and certifications that can be earned through the WorldatWork Society of Certified Professionals, specifically related to compensation.

WorldatWork offers several certifications in the area of compensation:

Certified Compensation Professional (CCP)

Certified Benefits Professional (CBP)

Certified Sales Compensation Professional (CSCP)

Certified Executive Compensation Professional (CECP)

These certifications involve taking a multiple-choice exam online or at one of the WorldatWork testing locations. The exams test for knowledge, experience, and skills in each of the compensation certification areas and can be a valuable asset to you when applying for HR positions.

The certifications are based on many of aspects, including understanding the goals of compensation packages for employees, which is our focus for this section.

First, the compensation package should be positive enough to attract the best people for the job. An organization that does not pay as well as others within the same industry will likely not be able to attract the best candidates, resulting in a poorer overall company performance.

Once the best employees and talent come to work for your organization, you want the compensation to be competitive enough to motivate people to stay with your organization. Although we know that compensation packages are not the only thing that motivates people, compensation is a key component.

Third, compensation can be used to improve morale, motivation, and satisfaction among employees. If employees are not satisfied, this can result not only in higher turnover but also in poor quality of work for those employees who do stay. A proper compensation plan can also increase loyalty in the organization.

Pay systems can also be used to reward individual or team performance and encourage employees to work at their own peak performance. In fact, in the 2011 list of the Best Companies to Work For by Fortune magazine, all the companies who topped the list (SAS and Boston Consulting Group, for example) had satisfied employees—not only with their pay, but their entire benefits package (Fortune, 2011).

With an appropriate pay system, companies find that customer service is better because employees are happier. In addition, having fairly compensated, motivated employees not only adds to the bottom line of the organization but also facilitates organizational growth and expansion. Motivated employees can also save the company money indirectly, by not taking sick days when the employee isn’t really sick, and companies with good pay packages find fewer disability claims as well.

So far, our focus on HRM has been a strategic focus, and the same should be true for development of compensation packages. Before the package is developed for employees, it is key to understand the role compensation plays in the bottom line of the organization. For example, in 2010, the U.S. military spent 22% of its budget on personnel salaries (U.S. Dept. of Defense, 2009). One-fifth of the total budget—or more—is not uncommon for most U.S. organizations, depending on the industry. As a result, it is easy to see why the compensation plan should be an important aspect of the overall HRM strategic plan.

Note: Adapted from “Goals of a Compensation Plan,” by Portolese Dias, L., 2011, Human Resource Management, Chapter 6, Section 1. Copyright 2011 Flat World Knowledge, Inc.

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