Introduction
Compensation and benefits schemes are created to ensure that employees are rewarded fairly and motivated according to their performance. Benefits and compensation plans need to be effectively managed and distributed efficiently (Cascio 2013). Compensation schemes may either be in the form of competitive salary packages and or other incentives used to reward hardworking employees. Human resource managers are responsible for developing decent policies that enhance compensation for employees’ productivity. These policies may include commissions, salaries, bonuses, pension schemes, promotions, comprehensive medical covers, life insurance, vouchers, sponsorships for education enhancements and profits sharing (Cascio, 2013). The main objectives of “compensation and benefits schemes are to sustain the performance of employees, attract a pool of candidates for new positions, retain employees and motivate employees” (Cascio, 2013). Compensation and benefits might be construed to mean the aspect of pay and salary alone merely, but the real components include the cost of an employee’s compensation and benefits.
Compensation and benefits schemes offered by contemporary companies
In the market, different companies are offering different compensation and benefits schemes that are based on their compensation and benefits strategies and policies. Some of the aspects of employees compensation and benefits that different companies are offering include retirement benefits, group or personal insurance schemes which incorporates life, dental, health and vision aspects, education funding, income protection, sick leave, leave allowances or vacation allowances, employee welfare and flexible working arrangements. Moreover, some companies provide alternative working schedules to suit employees availability.
Recommendation for a compensation structure
To have a well-motivated workforce for Traci in the limousine services business, I recommend the following compensation structure. First, in Traci’s company, there is a growing need to introduce a competitive pay package for the 25 employees; this will be obtained from the profits generated. Second, Traci needs to introduce a group insurance scheme for the 25 employees. As such, the insurance plan components to be covered include accident, health, life, income protection, and health. The other compensation structure needed to be introduced is partial or full funding for education for Traci’s employees. This is only meant for those employees who opt to advance their education for professional growth and enhancement. Moreover, the introduction of training plans for the employees would be beneficial to Traci’s employees. These training programs could either be on-the-job training or off-the-job training. The latter is highly recommended since the employees will undergo training away from the work environment, boredom will, therefore, be minimized and employees will also be introduced to new environments that enable them to synthesize all the topics covered in the respective training sessions. Off-the-job training will also be used to identify new training needs. Formulating a performance appraisal mechanism that leads to a performance management plan would be beneficial to Traci’s employees. To this end, employee’s performance and productivity will be evaluated periodically. Consequently, the outcome of the evaluation could be used as the basis for offering incentives and rewards to the most hardworking employees as a way to boost their morale and in the long-run increase productivity. Finally, the adoption of a recruitment and selection strategy that enhances the hiring of new employees based on merit would impact positively on Traci’s management plan. As such, this will eventuate in a lower employee turnover rate that is envisaged to be at 10 percent.
Recommendation for the position in the market
Currently, in the market, the compensation and benefits scheme is divided into four categories. These include “guaranteed pay, variable pay, equity-based compensation and benefits” (Cascio, 2013). Guaranteed pay incorporates a fixed reward system by the employer to the employee, for instance, salary or basic pay. Variable pay increases with productivity; therefore, if higher results are achieved due to improved performance, employees will be rewarded with bonuses that take a proportion of the profits generated. The other form of compensation is equity-based compensation. This means that the employees are given the right to partial ownership of the company. This ownership is manifested in the form of stock bonuses; therefore, employees are rewarded with bonus issues that increase their shareholding and the value they own in the company (Cascio 2013). It is important to note that stockholders are the major decision holders; thus, they are consulted before any crucial decision is made. Such decisions might include acquisition of new business either through conglomeration or merging. Equity-based compensation is, therefore, regarded as one of the most beneficial compensation scheme awarded to employees. The last compensation perspective or category in the market is the benefits category. This category includes all the benefits awarded to the employees to supplement compensation, and they include insurance covers, paid vacations, income protection, pension schemes, use of company’s cars, education sponsorships and many more.
Creating a total compensation and benefits strategy
A perfect compensation and benefits scheme is foreseen through a viable compensation and benefits strategy; therefore, in the limousines line of business, the recommended compensation and benefits strategy can be successful if the following components are incorporated. First is the budgetary allocation. To this end, a wise approach to allocating a certain percentage of the profits realized to the benefits and salaries scheme is important. As such, 20% of the revenue apportioned to the compensation and benefits scheme as salaries can be broken into smaller percentages to cater for different aspects such as insurance, allowances, education funding and other aspects of the benefits programs. Second is developing salary ranges. This will ensure that Traci’s company offers a competitive salary package that competes with the salaries that other organizations in the same industry offer for different positions. This will, in turn, reduce the turnover rate and leads to higher interests if the company seeks to hire for new positions. Third is the salary audit. This will involve frequent evaluations of the salary packages to ensure that the salaries being offered remain competitive and flexible with the changing economic trends and other trends within the industry. This will increase employee retention rates and reduce the loss of most qualified and valuable employees. The fourth is the benefits package. Benefits are programs that are always construed as being an accompaniment to the basic pay and salaries offered to employees.
Therefore, for Traci to attract most qualified employees in case of new positions as well as retain existing employees, a comprehensive benefits package is recommended. This will involve medical insurance, reimbursements of extra expenses accrued when working for Traci’s company, retirement benefits, and other benefits. New employees usually use the benefits package as the acceptance and rejection criteria for positions in different companies. Fifth is the performance management plan. This plan will ensure that employees are assessed and evaluated for their contribution to the company’s objectives, both short-term and long-term. This system incorporates the formulation of annual goals, performance appraisal mechanisms and a comprehensive system for mentoring, training and coaching employees. This will positively enhance employee productivity and engagement. Sixth is the legal compliance. This strategy incorporates the legal framework and the relevant regulations governing the compensation of employees and hiring of new employees too. Finally, embracing a structured administration would impact positively on Traci’s company. As such, there will be an organization structure created to foresee the success and management of the compensation and benefits scheme. Therefore, a subdivision can be created within the human resource department which will be mandated only to handle and run the compensation and benefits packages existing in the company. A comprehensive strategy will be the foundation for an environment that rewards and recognizes employee’s performance accordingly.
Using performance incentives and merit pay to recognize and engage employees
In any firm or organization, the use of incentives and merit pay can help in motivating and engaging employees towards the achievement of a company’s set goals and objectives (Cascio, 2013). Therefore, rewards based on merit, performance, projects handled, ability to meet deadlines and other aspects are beneficial to a company in the long run. Performance-based recognition and motivation help to improve productivity since the employees will be assured of their welfare and social security. This will assist in monitoring and reporting the progress made towards the achievement of the company’s objectives.
Identifying laws related to the benefits and pay program
The benefits and pay programs have to comply with a comprehensive legal framework. The law emphasizes the need to pay for overtime for extra hours worked, fair pay, the minimum wage requirement, submission of statutory deductions such as contributions to social funds and retirement schemes, and taxation. The law also requires that affirmative action be observed when recruiting employees to avoid gender bias while recruiting. It is also unlawful to discriminate against disadvantaged and marginalized employees.
Conclusion
A competitive compensation and benefits package, backed and powered by a comprehensive strategy is the blueprint to attract and retain most qualified and valuable employees in any organization (Cascio, 2013).
Reference
Cascio, W. F. (2013). Managing Human Resources Productivity: Quality of Work Life, Profits (9th Ed.). Boston, MA: MC-Graw Hill/Irwin.