BUS407 Powerpoint Assignment *Rephrase and Edit ONLY*
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BUS407Assignment1.pptxCompensation Strategies, Best Practices, and Challenges Presentation
Student Name
BUS 409: Compensation Management
Professor
November 16, 2020
Compensation strategies used to attract and retain talent
Determination of a compensation strategy depends on:
Employees’ attributes
Nature of the organization or the business (Bryant & Allen, 2013).
The most common strategies followed by firms are inclusive of:
Getting the right mix of compensation parameters
Consistency
Rising the levels of pay
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The determination of a compensation strategy to be followed is subject to two primary factors. The two factors are inclusive of employees’ attributes and nature of the organization or the business. Regarding these factors, the most common strategies followed by firms are inclusive of getting the right mix of compensation parameters, consistency, and rising the levels of pay. For instance, a compensation strategy focus on such factors as variable salary, base salary, pension, and flexible benefits, among others. Therefore, a sound plan of compensation would have the involvement of the highest possible number of elements accruing from the needs of employees.
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Best compensation practices
1. Using enough compensation data
Best firms refer to the data of the salary market.
Companies should understand their jobs’ compensation parameters.
The data used should be obtained from two or more sources.
These references increases the compensation’s reliability.
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Firms use various types of compensation practices in heed of attracting and retaining workers. One of the commonly used practice is using enough compensation data. Study shows that the best firms refer to the data of the salary market more often than other firms. Therefore, companies should seek to understand compensation parameters regarding individual jobs from the other firms found in the labor market. The data used should be obtained from two or more sources. Having various points of making references increases the reliability of the compensation both to the employees and the employers because it develops the right expectation levels.
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Best compensation practices contd.
2. Giving varied and higher bonuses
Successful firms generously give bonuses to workers.
Such firms offer the bonuses through:
Variable pay bonuses
Incentive-based bonuses
They should prioritize individual incentive.
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The second commonly used compensation practice involves giving varied and higher bonuses to employees. Most successful firms are associated with generosity regarding the giving of bonuses to their workers. Such firms often offer the bonuses through the following factors, respectively: Variable pay bonuses and incentive-based bonuses. The individual incentive bonus should be the most prioritized type of bonus. Most firms prefer using the individual-based incentives because they are more associated with the increase in the overall organizational productivity. Individuals increase their respective performance in heed of achieving the incentives offered. As a consequence, the performance at the organizational level also gets increased.
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Best compensation practices contd.
3. Training managers to communicate compensation
Top-performing firms train managers on communicating compensation.
The training should regard the organizational performance.
They should learn to share statements of total compensation.
This approach prepares employers and employees.
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The other practice used by organizations while providing compensation to their employees is the training of managers to communicate compensation to the employees and other stakeholders. Research shows that top performing firms train their managers effectively on ways of communicating compensation to workers. The training of the managers on compensation should be subject to the performance of the respective organization. For instance, the managers are let to understand the parameters that useful in providing the compensation within their respective organizations. The managers should be taught on sharing statements of total compensation to employees. This approach helps to prepare both the employer and the employees.
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Compensation-related challenges
Compensation-related issues affecting companies are:
Internal equity
External competitiveness
Executive compensation
1. Internal equity
Firms must ensure that their payments are equitable.
The equitability must be reached following legal conditions.
The compensation should not be discriminative.
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Some of the compensation-related issues affecting companies are internal equity, external competitiveness, and executive compensation. Each of the three challenges affect companies in different ways. This presentation discusses the effects associated with each of them. Regarding the internal equity, firms are supposed to ensure that their payments are equitable to their employees. The equitability must be reached following legal conditions. Also, the compensation should not conflict the need to avoid discrimination among the workers. In heed of observing these conditions, the managers of human resource departments of organizations may discourage some the employers or make the organization incur overhead costs.
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Compensation-related challenges contd.
2. External competitiveness
Firms set compensation regarding their competitors’ forces (Bova, 2014).
An organization’s compensation should be appealing.
Weak compensation disables talents’ attraction and retention.
This situation complicates the process.
Different firms use different parameters.
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The other challenge affecting the provision of employee compensation by organizations is external competitiveness. Firms regard the forces from their competitors when setting compensation parameters. An organization’s compensation should be more appealing than the ones offered by its competitors. A weaker compensation risks the ability to attract and retain talents because workers will always be attracted by the workers that provide them with the best working conditions and environment. This situation complicates the process because different firms follow different parameters regarding their sizes and nature. For instance, some a firm may offer better compensations than others because it is served by a lesser number of employees.
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Compensation-related challenges contd.
3. Executive Compensation
Firms spend time deciding on their executives’ compensation – especially the public companies.
Public companies publicize their executive (Maloa, 2018).
The publicity leads the firms to be criticized.
They have to give publicly acceptable plans.
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Executive compensation also troubles companies when setting compensation plans for their human resource departments. In most seasons, the compensations offered by organizations to their executive members are relative. Firms spend much time deciding on the compensation they should pay their executives – especially the public companies. The public companies are always required to disclose their amounts of executive compensations to the public. The publicity of these amounts and plans makes the firms to be criticized by both the public and their stakeholders. As a result, they have to come up with an attractive and publicly acceptable compensation plans to minimize the chances of getting into crises.
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Discretionary benefits
Discretionary benefits are the benefits that the law does not guide or mandate an employer on their provision to employees.
They benefit firms and stakeholders in:
Matching the benefits of its competitors
Boosting its productivity
Offering benefit choices to employees
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Discretionary benefits are the benefits that the law does not guide or mandate an employer on their provision to employees. These benefits may be made up of such elements as sick leave, health insurance, vacation leave, and maternity leave, among others. They are used by companies to benefit a firm and its stakeholders in various ways. Some of such ways are inclusive of matching the benefits of its competitors, boosting its productivity, and offering benefit choices to employees. For instance, when the health of employees gets improved through the benefits, their outputs increases. As a result, the productivity of the employer also increases.
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Factors impacting companies' compensation strategies and practices
Labor unions, laws, and market factors affect compensation.
FLSA causes this impact (Clinton, 2011).
It affects the compensation through:
Minimum wage
Equal pay
Record keeping requirements
Overtime pay
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Compensation strategies and practices of companies are affected by such elements as labor unions, laws, and other market factors. These elements control the behavior of an organization regarding the incentives it offers to its workers. One of the primary laws causing this impact is the fair labor standards act (FLSA). It affects the compensation following its 4 provisions. These provisions are inclusive of minimum wage, equal pay, record keeping requirements, and overtime pay. It ensures that employees are not exploited by their employers in their respective lines of duty. It also ensures that the labor unions does not follow biased procedures while relating with their members.
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Factors impacting companies' compensation strategies and practices contd.
Market factors control labor’s demand and supply (Masruroh & Supriadi, 2017).
Trends of demand and supply affect compensation.
Labor unions pressurize employers to provide incentives.
Organizations provide satisfactory conditions to avoid the problems.
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The activities of compensation by companies are also affected by the factors prevailing in the labor market. The labor market factors control the forces of demand and supply affecting human resources. The trends of demand and supply, eventually, affect the decisions of employers about their compensation plans. Labor unions also affect the compensations that organizations offer to their employees. In most cases, these unions pressurize employers to provide better incentives in their work environments. Organizations provide satisfactory conditions to their employees in heed of avoiding problems that may accrue from the union of employees. These problems may include strikes and lock-outs.
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References
Bova, F. (2014). Employee bargaining power, inter-firm competition, and equity-based compensation. SSRN Electronic Journal. doi:10.2139/ssrn.2457305
Bryant, P. C., & Allen, D. G. (2013). Compensation, benefits and employee turnover. Compensation & Benefits Review, 45(3), 171-175. doi:10.1177/0886368713494342
Clinton, J. D. (2011). Congress, lawmaking, and the Fair Labor Standards Act, 1971-2000. American Journal of Political Science, 56(2), 355-372. doi:10.1111/j.1540-5907.2011.00547.x
Maloa, F. (2018). Executive compensation: Influence and reciprocity effects. Employee Relations, 40(1), 106-123. doi:10.1108/er-04-2016-0076
Masruroh, R., & Supriadi, Y. N. (2017). Analysis of factors affecting employee engagement. Proceedings of the 2nd Global Conference on Business, Management and Entrepreneurship. doi:10.5220/0007117202010206
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