Benefits and Compensation in Human Resources

Benefits and fee in Human ResourcesWhat argon your benefits is the first thing many applicants ask. Benefits indirect financial and nonfinancial payments employees receive for continuing their employment with the company are an important part of just about e rattlingones honorarium. They include things like wellness and life insurance, pensions, time arrive at with pay, and pip-squeak-care assistance. Most full-time employees in the United States receive benefits. Virtually all employers offer some health insurance coverage. Employee benefits account for between 33% 40% of wages and salaries (or about 28% of total payrolls). Pay for time non worked is the virtually costly benefits, because of the large amount of time off employees. allowance is a primary motivator for employees. People look for jobs that not only suit their creativity and talents, yet compensate them-both in bournes of salary and other benefits-accordingly. Compensation is also one of the fastest changing fields in Human Resources, as companies continue to investigate various ways of recognize employees for sufficeance.It is important for lower-ranking business owners to understand the difference between wages and salaries. A wage is based on hours worked. Employees who receive a wage are often called non-exempt. A salary is an amount paid for a particular job, regard little of hours worked, and these employees are called exempt. The difference between the two is carefully defined by the type of home and the kinds of tasks that employees perform. In general, exempt employees include executives, administrative and professional employees, and others as defined by the Fair Labor Standards Act of 1938. These groups are not covered by minimum wage provisions. Non-exempt employees are covered by minimum wage as well as other provisions.It is important to pay careful precaution to these definitions when determining whether an individual is to receive a wage or a salary. Improper classi fication of a position can not only deposit legal problems, exclusively often results in employee dissatisfaction, especially if the employee believes that execution of the responsibilities and duties of the position warrant greater requital than is currently awarded.When setting the level of an employees monetary earnings, some(prenominal) promoters moldiness be considered. First and foremost, wages must be set high enough to motivate and attract good employees. They must also be equit adequate to(p)-that is, the wage must accurately reflect the value of the labor performed. In order to determine salaries or wages that are both equitable for employees and sustainable for companies, businesses must first make authorized that they understand the responsibilities and requirements of the position under review. The next step is to review prevailing rates and classifications for similar jobs. This process requires inquiry of the competitive rate for a particular job within a gi ve geographical area. Wage surveys can be helpful in be wage and salary structures, but these should be undertaken by a professional (when possible) to achieve the most accurate results. In addition, professional wage surveys can sometimes be found through local employment bureaus or in the pages of trade publications. Job analysis not only helps to set wages and salaries, but ties into several other Human Resource functions such as hiring, training, and performance appraisal. As the job is defined, a wage can be determined and the involve for hiring and training can be evaluated. The evaluation criteria for performance appraisal can also be constructed as the specific responsibilities of a position are defined. separate factors to consider when settling on a salary for a position include Availability of people capable of fulfilling the obligations and responsibilities of the job, Level of demand elsewhere in the community and/or industry for prospective employees, Cost of living in the area, Attractiveness of the community in which the company operates, Compensation levels already in humans elsewhere in the company.There are many federal, state, and local employment and tax laws that impact wages. These laws define certain aspects of pay, influence how much pay a person may receive, and shape general benefits plans.The Fair Labor Standards Act (FLSA) is probably the most important piece of stipend legislation. Small business owners should be thoroughly beaten(prenominal) with it. This act contains five major hire laws governing minimum wage, overtime pay, equal pay, recordkeeping requirement, and child labor, and it has been amended on several make over the years. Most of the regulations set out in the FLSA impact non-exempt employees, but this is not true across the board.The Equal Pay Act of 1963 is an amendment to FLSA, which prohibits differences in compensation based on sex for men and women in the same workplace whose jobs are similar. It does not prohibit seniority systems, merit systems, or systems that pay for performance, and it does not consider exempt or non-exempt status.In addition, the United States government has passed several other laws that have had an impact, in one way or another, on compensation issues. These include the Consumer Credit Protection Act of 1968, which deals with wage garnishments the Employee Retirement Income Security Act of 1974 (ERISA), which regulates pension plans the Old Age, Survivors, Disability and Health Insurance Program (OASDHI), which forms the al-Qaeda for most benefits programs and implementation of unemployment insurance, equal employment, workers comp, Social Security, Medicare, and Medicaid programs and laws. For the most part, traditional methods of compensation involve set pay levels (wage or salary) with regular increases.Increases can be given for a transformation of reasons, but are typically given for promotions, merit increases, or cost of living increases. The Ha y Group points out that there is less distinction today between merit increases and cost of living increases Because of the low levels (3 to 4 percent) of salary budget funding, most merit raises are perceived as little more than cost of living increases. Employees have come to expect them. This base pay system is one that most people are familiar with. Often, it includes a set salary or wage, a set schedule for merit increases, and a set benefits package.Benefits are an important part of an employees total compensation package. Benefits packages became popular after World War II, when wage controls made it more difficult to give competitive salaries. Benefits were added to monetary compensation to attract, maintain, and motivate employees, and they still perform that function today. They are not cash rewards, but they do have monetary value (for example, spiraling health care costs make health benefits particularly essential to todays families). Many of these benefits are nontaxa ble to the employee and deductible by the employer.Many benefits are not required by law, but are notwithstanding common in total compensation packages. These include health insurance, accidental death and dismemberment insurance, some form of retirement plan (including profit-sharing, nisus filling programs, 401(k) and employee stock ownership plans), vacation and holiday pay, and sick leave. Companies may also offer various services, such as day care, to employees, either free or at a reduced cost. It is also common to provide employees with discounted services or products offered by the company itself. In addition, there are also certain benefits that are required by either state or federal law. Federal law, for example, requires the employer to pay into Social Security, and unemployment insurance is mandated under OASDHI. State laws govern workers compensation.As businesses change their focus, their approach to compensation must change as well. Traditional compensation method s may h experient a company back from adequately rewarding its best workers. When compensation is tied to a base salary and a position, there is little flexibility in the reward system. Some new compensation systems, on the other hand, focus on reward for skills and performance, with the work force sharing in company profit or loss. One core mental picture of new compensation policies is that as employees become employee owners, they are likely to work harder to ensure the success of the company. Indeed, programs that promote employee ownership-and thus employee responsibility and emotional investment-are becoming more and more popular. Examples of these types of programs include gain sharing, in which employees earn bonuses by finding ways to save the company funds pay for knowledge, in which compensation is based on job knowledge and skill rather than on position (and in which employees can increase base pay by learning a variety of jobs) and incentive plans such as employee st ock options plans (ESOPs).Compensation programs and policies must be communicated clearly and thoroughly to employees. Employees naturally want to have a clear ground of what they can reasonably expect in terms of compensation (both in terms of monetary compensation and benefits) and performance appraisal. To ensure that this takes place, consultants urge business owners to peak all aspects of their compensation programs in writing. Taking this step not only helps reassure employees, but also provides the owner with additional legal protection from inequitable labor practices accusations.Todays competitive business milieu is forcing companies to rethink how to attract and bind top talent without sacrificing business goals. Employee compensation and benefits are an employers primary tools to attract and retain talented employees, but they are facing more scrutiny now than ever. Plan fiduciaries are under increased nip to adhere to rigid standards in light of recent corporate sca ndals. Waves of employee benefits legislation and regulation threaten to swamp employee benefit plan administration.Many companies are faced with un motivated employees whose poor location can greatly affect the growth of the company. By introducing incentives, companies can boost employee morale tremendously. A few examples of employee incentives are paid vacations, company sponsored social activities, stock options, and bonuses or pay increases based on performance. These are just a few activities that can lead to a more productive work environment. HR is usually faced with suggestions but is unable to put them into company insurance policy.The most challenge Human Resources department facing is employees turnover. Meeting the demands of todays changing business environment requires building and retaining a loyal and motivated staff. Therefore, finding and keeping quality employees so as to reducing turnover is one of the key challenges of HR department. Employees who retrieve theyre underpaid will also feel theyre undervalued and are more open to potential offers from outside firms. To a firm, the effects of turnover can be costly. The time and coin it takes to recruit, rehire and retain can quickly cut into a firms bottom line. Besides the costs, especially for the high-technology companies, employees turnover means high risks of losing its important technologies and clients.To capture a loyal, motivated workforce and keeping turnover at a minimum, the first step is finding and hiring good people. Therefore, Its crucial to have a recruiting strategy in place. Secondly, it surely takes more than money alone to attract and retain skilled professionals, its helpful to offer competitive compensation packages, for example to be flexible and tailor compensation to individual employees pay a little more than prevailing salaries at other firms acknowledge your employees contributions as frequently as possible offer staff members opportunity and reward them when they succeed. Thirdly, creating an employee-friendly work environment also black market a role. The implication is clear The more enriching your work environment, the more likely you are to retain a staff of satisfied, productive employees.The single most challenging issue facing HR executives today is the benefits package a company offers to its employees. Such benefits as retirement plans, healthcare, family leave plans and vacation time are becoming increasingly important to employees. However, such benefits are costing companies a tremendous amount of money each year and its on the rise. Human Resource executives must find a middle ground that will not only please its employees, but also be affordable to the company.The most challenging HR issue facing companies today is the ability to offer a competitive incentive package. Employees today want to work for a company that offers reasonable salaries, excellent health benefits, a pension plan and comprehensive 401k plans. No t to mention tuition reimbursement, child care centers, fitness centers, life insurance, and the all-important paid time off. Each of these perks is very costly to the company, but without them the quality of their workforce would be sacrificed. Companies seem to be adding more benefits to attract and retain employees, but with the increases in the cost of these benefits who know how long they will last. HR executives need to understand their company and be able to offer as many benefits as possible without hurting the profitability of the company.If you own your own business, your employee compensation and benefits package can be the deciding factor for many potential employees. And its not just the money. To make your company competitive and attractive to job candidates, you have to offer an exceptional total benefits package. That makes it a very important part of your business planning and management process if you hope to hire (and keep) top employees.Of all the disciplines in the human resources field, compensation is one of the most complex. Handling compensation issues requires knowledge of employment trends, the value of experience and credentials for various positions and industries, negotiation skills, company budget and the organizations bottom line. Economic conditions also play an important role in compensation and benefits issues. Addressing compensation issues can range from developing competitive wage scales to weighing the advantage of bonus and incentive payments.The term compensation means financial payments such as wages and salary paid to employees. Compensation also includes bonus and incentive payments, raises and company stock awarded to employees. Compensation specialists often have knowledge of both compensation and employee benefits. This is one reason why human resources departments sometimes combine compensation and benefits into one departmental function.HRs efforts to blend compensation strategies and practices are a key compon ent of successful mergers and acquisitions. In todays whirlwind of mergers and acquisitions (MAs), everyday HR issues such as employee compensation may get blown aside as countless financial and legal priorities take center stage. However, recent research suggests that HR could play a greater role in successful MAs, and, the earlier HR gets involved, the better.Depending on the circumstances of the deal-and the compensation policies of the merging companies-HR may be called on to splice disparate payment plans into a program that fits the new organization, or HR may have to discard the original plans and then create a program from scratch that complements the merged entities. Either way, old and new employees will be concerned about what is happening with their pay, so HR also must develop an effective communications plan to pronounce and reassure them.Compensation represents the largest of all expenses in most organizations, and it is in turmoil. The Federal governments statement s are inconsistent and have resulted in much uncertainty. Executive Compensation is a global issue, including who is an executive, CERP implications, and long and short-term incentives. While some employers are reducing hiring and merit budgets, freezing salaries, decreasing bonuses and pay, passing on of benefit costs, and gasp pillowcase out 401k contributions they should also remain concerned about holding on to their most talented employees when the economy recovers. With decreasing revenues, sales compensation structures are cosmos revised, such as the trend away from a revenue basis to a profit basis. Then there are the changes in 401(k) and other plans Companies are cutting their match, and the IRS is providing guidance.It is the biggest pain of Compensation and Benefits how to introduce the fair and transparent compensation policy to the organization. In the public sector, this issue is quite easy to solve as their compensation scheme are pretty rigid and people get us ed to them. But in the large corporations the transparency and fairness of the compensation policy can be a documentary issue to the employees.The organizations usually know what it means to have a fair and transparent compensation policy. But the pressure of the business and the constant need to change makes almost impossible to make the compensation policy transparent and fair to all the employees. It needs a mete out of time and effort.Fair Compensation Policy needs a clear definition of job descriptions and job profiles in the organization. The value of each job must be evaluated and the organization must develop a clear system of jobs within the organization. In this stage the HRM is under a big pressure as the managers know about the impact of the job evaluation to the real salaries and bonuses. The whole system must be clearly supported by the Top caution of the company. When the organization has a clear system of job evaluation and all the job positions are put in the co rrect order, the organization can develop the Fair Compensation Policy. The fair compensation policy takes the following inputs, job, evaluation, job market situation, business strategy, preferences of the organization.Based on the inputs the HRM can prepare the fair compensation policy, which enables the company to reach better performance. The HRM is responsible for the correct setting and keeping the rules during the procedure of creation of the fair compensation policy. The fair compensation policy means the fair value of each job in the organization and clear process of reaching this fair value.Transparent Compensation Policy is about go-ahead the rules for the compensation policy to employees. When the employees have a chance to understand the principles of the compensation policy and they can take them as fair to them, you are successful in the implementation of the Transparent Compensation Policy. The Transparent Compensation Policy is about the courage to open the rules an d the compensation policy must be ready to be open. In case, the compensation policy is not fully implemented and the employees are not fully in the compensation range, it is very dangerous to make compensation policy transparent.Honestly, these basic rules about the Fair and Transparent Compensation Policy are easy to write, but very hard to follow in the real business life. But every HRM should implement Fair and Transparent Compensation Policy to support the performance of the business and to increase satisfaction of employees.