Functions of the Human Resource Department, Employee Compensation - Essay Example

BUSINESS FUNCTIONS & PROCESSES Introduction The idea of knowing a successful company has prompted a lot of research activities and studies across many business organizations in the world. Views of business managers and owners have been widely examined in a bid to get insight into this intriguing question. Much of the existing literature in a range of subject disciplines often takes the perspective of performance that is depended on consistency in time regarding financial measures, returns on business assets as wellas profitability in relation to the kind of performance exhibited by other companies in the dame industry (Baldwin & Wilkinson 2000, p. 57). In some cases, the concept of share price performance has been thought to be another important tool used in assessing the success of a company. However, it is important to understand that the success of a business organisation is often the sum total of all the different business process and functions (Chroneer, Johansson &Malmstrom 2015, p. 95). In this understanding, business managers are supposed to ensure that they create functional teams in their respective organizations in order to harmonize the different efforts to cause a general uniform success and achievement of the business goals and objectives. In many companies and other business organizations, success often means effective performance of the share price or simply general profitability. The process of comparing profitability in the industry among different firms is often aimed at establishing profitable companies in order to undertake the comparison process. However, this approach is not always the best because different companies and business organizations do not particular comparators because the respective business mix lacks similarity (Sedek 2012, p. 509). It goes without mention that in general, the success of the organization’s different organisation is the main point of concern when it comes to assessing the overall success of the firm. It is therefore this kind of understanding that this paper draws its main source of concern, examining the contribution made by the human resource department in its compensation role towards ensuring that the business creates and consolidates on its market share. Human Resource Management Baldwin & Wilkinson (2000), explains that in every organisation, effective management of people and resources is an important process that is thought to be the core of its success (57). Whether businesses have the department in charge of people management or not, there will always be a person charged with ensuring that the welfare of staff is effectively addressed. However, as organized increases in their capacity to handled bigger tasks, the need t have the human resources department cannot be overemphasized in any case (Baldwin & Wilkinson 2000, p. 64). Human resource management, commonly referred to as HR or HRM simply refers to the organizational functional that is established in order to maximize on the employee performances in terms of services to the strategic objectives of the employer (Ananthan & Appannaiah 2010, p. 32). This function is primarily responsible for the effective management of staff within the respective organisation, by giving much focus to the systems and policies of the organisation. In this regard, it is important to point out the functions of the human resource department is to ensure that it developed policies, systems and strategies that can be used in the effective management of people to ensure that the final goals and objectives of the organisation are met in the most effective and efficient manner. Stack (2010), explains that the human resource units and departments in many organizations perform a variety of functions including recruitment of employees, their training and development (44), rewarding functions that include benefit systems and pay as well as issues of ;performance appraisal. Additionally, human resource management also deals with various issues involving industrial relations (Baldwin & Wilkinson 2000, p. 75). In this perspective, they the function of the department is to create a balance between requirements of the organizations emanating from various government laws and collective bargaining and the organizational practices. Functions of the human resource department In any business organisation, a human resource department that is run efficiently offers the organisation with a structure as well we ability and potential to meet the diverse business needs by having an effective management of the most essential resources in the organisation – the employees (Sack 2010, p. 36). Often, several human resource disciplines exist; however, human resource practitioners in each of the available disciplines can perform several functions (stack 2010, p. 36). For small businesses, the lack of an effectively dedicated human recourse department can still see the business attain similar levels of workforce management and efficiency by outsourcing the functions of the Human resource department (Sims 2002, p. 76). Alternatively, the business organisation can also decide to join a professionally working employer organisation in order to perform some of the critical functions of the department like recruitment and employment (Baldwin & Wilkinson 2000, p. 59). In many startup organizations, the duties of the human resource are often undertaken by various trained professionals. When it comes to large companies, a completely functional group is often assigned the role of undertaking the human resource functions (Schwartzel 2012, p.47; Parmenter 2002, p. 31). In this process, the staff often specializes in the different human resource functions and tasks where they undertake strategic decision-making for the success of the business. It is important to note that the human resource department of any organisation undertakes many functions, all of which are designed to cause effective management of the organization’s most important resource-the employees as noted above (Baldwin & Wilkinson 2000, p. 89). Some of the functions include undertaking a job evaluation exercise, which is geared towards performing the staffing functions. A successful job evaluation exercise enables the department to know the requirements of the organization in terms of the activities that need to be undertaken by different staff (Baldwin & Wilkinson 2000, p. 92). Thereafter, the department makes job advertisements in order to recruit staff that has the knowledge and skills to undertake the already identified job functions. After recruiting potential job candidates, it is the duty of the human resource department to ensure that these people are given an induction, which enables them understand the organizational culture and fit in the new workplace (Klerk 2012, p. 849). In order to elicit their maximum performance, the human resource department ensures that it has put in place better systems of staff development, which provides the much needed empowerment and motivation to the staff. For instance, it has to create a constant and consistent on-the-job training and development in order to increase the staff knowledge and skills of handling issues arising from their job and the industry in general (Klerk 2012, p. 849). For the sake of this paper, we will concentrate on the function of the department that deals with staff compensation and benefits management. Just like labor and employee relations, the benefits and compensation function of the human resource department can be undertaken by human resource specialists that have dual expertise (Klerk 2012, p. 848). For compensation, the functions of the human resource include establishing effective compensation structures as well as reliable pay structures (Venkateswaran 2012, p. 65). Lipman& Hall (2008) says that the human resource specialist in charge of compensation and benefits can negotiate for group health as well as other coverage rates with various insurers as well as coordinate the associated activities with administrators in charge of retirement savings (28). Employee Compensation Employee compensation, which is one of the most essential functions undertaken by the human resource department in an organisation, can be described as the benefits and cash compensation, which a person employed, gets in exchange services performed to the employer (Mondy & Noe 2005, p. 37). In most business organizations, cash compensation is the most common, consisting of salary and wages. It also includes bonuses and commissions paid to the employees for any extra work they do besides their job description in the company or business organisation. The benefits that organisation workers get as compensation includes paid health insurance schemes, retirement plans, disability insurance, life insurance as well as paid vacations and allowances among others that motivate them towards better performance (Lipman& Hall 2008, p. 34). Sustainability Aspects of employee compensation Compensation plan in many companies and business organizations can be variable, depending on the prevailing work conditions and fixed, so that it is standard irrespective of the emerging work assignments or both (Lipman& Hall 2008, p. 41). For variable compensation, it is depended on an employees’ performance in the company, those that work extra hard get higher compensation packages in the different forms agreed, whether it is cash or in kind. Some of the most common forms of variable pay in business organizations include incentives, commission and bonuses (Mondy & Noe 2005, p. 56). It is important to note that in a business organisation, benefits are often divided into two main categories. First is the company-paidcompensation plan; in this plan, the company pays for the benefits offered to employees in full including vacation pays and holiday plans. The second plan, known as employee-paid is simply an agreement where the costs of the benefits are shared between the company and the employee. For instance, benefits like insurance involve the company paying a part of the cost and the rest to be met by the employee (Mondy & Noe 2005, p. 65). Qualitative aspects of employee compensation In many countries, the concept of employee compensation is often shaped by legislations arrived at by policy makers and legislators. For instance, they are often governed by tax policies in the country, history of the plan as well as the law in general. Health insurance, one of the most common forms of employee benefits, is offered by almost all business organizations in the United States since the country does not have a health insurance sponsored by the government (Ichniowski 2000, p. 37). Graham & Roth (2008) puts it that in the provision of this form of benefit, premiums are often deductible on an employee’s personal income tax (17). In the face of increasing competition in the current business environment as a result liberalization of the economy in most countries, many businesses have been trying to devise effective ways of managing their staff competition in order to elicit maximum performance from them. For this reason, the need to have compensation and benefits plans that lead to an increased intrinsic motivation among employees is the drive for most human resource managers in both domestic and multinational companies (Noe 2006, p. 53). In this regard, it is important to examine some of the ways of improving the practice of this important business function so that a business can create an effective competitive advantage over its rivals (Graham & Roth 2008, p. 18). Improving employee compensation plans in business organizations In the past, many business organizations have been losing better human resources to other businesses. This has made them to develop a notion that by having a pay rise, they can at least try to retain them to their effective performance (Graham & Roth 2008, p. 24). It is important to appreciate the fact that money is a solid motivator, which has been used with maximum outcomes in many industries. Money has been applied as very strong compensation plan (Nowicki, Lewis &Lippitt 2004, p. 27); however, business managers and owners are supposed to understand that bigger paychecks are not always effective options for increasing employee performance. Daily emerging expenses like groceries, gas among others can end up taking the cash award given to the employee making him/her forget about it; instead, it is important that a good compensation benefit create memories to employees, making them increase their efforts whenever they set their eyes or hand on it. Making work place fun Work, in an organization is not supposed to be a romper room; additionally, any work day for an employee is not also supposed to be highly monotonous in order for the business to succeed. In some companies, meeting given deadlines and performing the work itself offers enough stress to the employees. In such scenarios, it is often thought that by encouraging workers to try and have fun in the course of their work makes a great difference. Nowicki, Lewis &Lippitt (2004), in their work, posits that some businesses have ended up making gyms and recreational centers at the work place so that its workers can relieve some of the work related stress in the course of their work, thus leading to improve performance. In turn, creating of such a system often makes the work place an exciting environment to be (43). In creating fun, it is often thought that by establishing functions teams in terms of departments or other criteria that appeal to the business is also an important approach that elicits maximum performance from business employees. In functional teams, the employees complement each other; make fun and thus achieving a lot because of their shared work experiences (Nowicki, Lewis &Lippitt 2004, p. 92). Offering performance based promotions Another effective alternative to compensation benefits in a business includes appreciating performance of employees by offering promotions based on the performance merits. Madura (2003), says that when the employees of an organisation know that they can earn much depending on their performance, they end up doing their level best in order to achieve that privilege (49). In this regard, it is important that the business undertakes a frequent employee evaluation in order to assess their performance. Business managers and owners should then follow through by proving pay for performances with regular performance meetings happening almost in every quarter as opposed doing it at the end of the business year (Madura 2003, p. 52). In these meetings, employees that have excelled in their respective work responsibilities should be appreciated in order to motivate others to follow suit. According to Madura (2003), when each employee is working towards such recognition and pay, the business ends up performing in an outstanding fashion. Creating extra time offs for employees It has also been discovered that time off is a very strong motivator among the employees of an organisation just like money does, if not offering more outcomes in some instances. In this regard, it is important that businesses try to create contests from which employees can compete towards getting extra hours for their off. The winner in such contests should be given the liberty to decide their time offs. They can decide to report in late for their work or have extra time for their lunch (Desai 2002, p. 65). In some business organizations, they often come up with team goals that are aimed at creating and enhancing unity among the staff. In such a case, whenever the teams achieve their set goals, they can always leave the work place at their convenience. In the end, the employees always look forward towards achieving their set goals, which are often derived from the overall goals and objectives of the company (Rugman & Hodgetts 2003, p. 46). Rugman & Hodgetts 2003, explains that such kind of a move is often very effective, enabling the organisation to achieve its goals and set new ones. Problems associated with employee compensation tools Employee compensations have often been ranked among some of the highly critical functions undertaken by a business organisation. This exercise, in most business organizations in modern times has become quite complicated containing several underlying issues that require careful consideration in order to set effective and reliable approaches to the process. Total compensation, which is an essential part of employee compensation can simply be described as overall rewards, benefits and compensation both direct and those that are indirect enjoyed by employees of a business organisation (Loofbourrow 2001, p. 48). Some of the critical issues emerging as far as employee compensation and benefits are concerned include creating an effective base compensation program or package, making a clear different between company costs and pay for employees, issues of legal compliance as well as including a variable pay component that elicits maximum performance from the employees (Reddy &Appannaiah 2010, p. 52). It is important that companies try to ensure that they undertake the compensation and benefits plan a way that does not cause them unprecedented loses because of the huge expenses involved in the exercise (Devinney 2010, p. 61). However, the process must be made in such a way that it leads to an effective balance in terms of the costs involved and the outcomes that it brings. The compensation plan should be designed in such a way that it leads to maximum results so that it does not cause loses in its implementation. Possible solutions In order to find the best approach towards many of the problems and challenges affect the compensation and benefit plan in organizations, it is important that human resource practitioners undertake an effective research of how best to implement a compensation and benefit plan before deciding on one (Sirota, &Mischkind 2005, p. 61). This is because, jumping on to implement a compensation and benefits plan without considering its implications on the organisation can be detrimental to its performance. Organizational managers should often try to examine some of the ways of managing ensuring that they effectively compensate their employees without putting emphasis on monetary approaches because their overall effects is often short-lived. Compensation plans that cause intrinsic motivation among company employees are the most effective because they make employees undertake work responsibilities because of the perceived satisfaction and not monetary and other tangible rewards (Sen 2008, p. 26; Desai 2002, p. 78). For instance, creating recognition and promotions are very effective because they enable their employees derive intrinsic motivation. In general, having compensation and benefits plan in an organisation is one of the most important business functions that can cause a competitive advantage and success. Conclusion In conclusion, it is important to understand that the business environment in modern times is changing drastically, calling for various approaches that can cause organizational success and effective performance. In this case, research into some of the ways that the organisation can undertake its business functions is imperative in order to have a successful growth process. 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