Compensation Plan for Safaricom - Assignment Example

Compensation Plan Outline Introduction Safaricom as a telecommunications trading company realizes the essence of a quality workforce in achieving its objectives as outlined in the business plans (Mathis & Jackson, 2010). Thus, in pursuit of these goals, the company, through its human resource department and the management, strives to achieve the best workers to serve within its operations. Additionally, to prosper in the factors of competition against its competitors, Safaricom cognitively explores various channels and strategies to engage the employees accordingly in delivering quality and efficient service. Thus, in return, the company developed a strategic compensation and remuneration plan, in which the company seeks to compensate its workers accordingly for the services delivered (Aguinis, 2009). Safaricom entails a strategic compensation approach towards its employees, translating into high motivation and employee retention rates. The existing compensation plan The current compensation plan entails a pragmatic approach in which the company focuses on the features of the qualification of employees accordingly in facilitating their salaries and related benefits. The company focuses on the areas of the skills of the employees and their individual contribution to the accomplishments of the company in rewarding the efforts thereof of the employees. In practical definition, the company rewards and allocates the compensation based on the current market situation and the service the workers deliver to the company operations (Aguinis, 2009). Further, the company also entails remarkably incredible platform of offering incentives to its workers, to foster the employee motivation accordingly. The company has incentives such as promotional offers to the employees for goods and services from the company as rewards for the services they deliver to the company. Further, the company also offers credible salaries to the employees, as exemplified by the recent reports in which the company released its statistics, regarding their employee remuneration expenditure, as the report indicates. The company spend about Kenyan shillings 8.4 billion on salaries and benefits to its employees, in the year that finished in March 2013 (The Vodacom Group, 2014). Of this budget, more than 5.1 billion shillings went to wages and salaries while about 95 million shillings went to the allocation for employee grants option plan. The directors of the company got about 387.7 million in remuneration, which is higher than the previous allocation, while the rest was for the other staff. Similarly, the company, comprising of 3,254 permanent employees, increased its pay to the employees accordingly, as the profits of the company grew (The Vodacom Group, 2014). Thus, from this report, it is notable that the company has a strategic compensation plan, engaging the employees satisfactorily; hence, fostering their retention and motivation. The company has a successful compensation plan for its employees. Ratio of internally consistent and market consistent compensations systems for the company Safaricom as a telecommunications company operates within a relatively competitive business environment, with several competitors in the industry. Thus, there is a strong challenge to foster the processes of motivating and retaining the workforce accordingly, further, the competitive environment also sets standards in the aspect of the ratio of benefits as facilitated to the workers in the company operating within this industry. Consequently, Safaricom as an active participant in this industry has an obligation to ensure it meets the standards of remunerations as the industry dictates. The average pay within the industry for the lowest paid workers ought to comply with the government set standards for pay of workers as the constitution of Kenya, on Labor Laws of the country dictate. Thus, in this spirit, Safaricom observes the labor laws of Kenya accordingly, offering high rates of pay for her employees, which meet the standards of the laws and some, which surpass these marked levels of pay. Further, in comparison to her competitors, Safaricom is keen to ensure that it facilitates compensation rates that enable her to maintain high retention rates of employees, as well as, avoid the aspects of increased employee turnover, which cost companies’ time, money and profits. The company in the recent report as published on March 2013, the end of the business year, it engaged a high compensation rate that was about 11.7 percent higher than the nearest competitors pay terms and costs (The Vodacom Group, 2014). Thus, from this perspective, the company has a remarkably high ratio of paying system, offering both salaries and adding benefits to the compensation plan of the employees. The company pays remarkably higher than the consistent internal market compensation systems. Thus, to consistently stay coordinated with the market rates, the company utilizes a system in which it offers remarkably higher compensation ratios; thus, maintaining its successive space in the telecommunication industry in the country. The compensation system of Safaricom in which it features accordingly the features of skills, qualifications and market rates is beneficial for the ratios included accordingly in its compensation plan. Current pay structure and recognition of employee contributions Safaricom as a trading company realizes the reflective aspect of image and employee satisfaction in driving the success of the company accordingly. Therefore, as the organization pursues its employee benefits programs, it initiates several elements in its current pay structure to foster the employee motivation via the remuneration and procedural elements incorporated in structuring pay. The current pay system of the company originates form a gradual system development in designing the criteria for paying her employees. Safaricom consistently appeals to extremely competitive, performance driven compensation structures, in which they keenly focus on the aspects of quality and improved input and explicit and assured incentives on the compensation, plan. Additionally, an independent and effective oversight board closely monitors all compensation activities, their benefits, worthiness and contribution towards the advancement of the company objectives and review compensation policies and practices regularly. Moreover, members of the employee oversight board also offer necessary advice on issues of executive compensation and ensure adoption of the best possible and responsible compensation programs that comply with standards and regulations. It fosters the elements of advanced approach to the supervisory feature of the compensation process, correcting all the elements of the pay structure in line with the compensation expectations and agreements with the employees. The other important practice in the pay structure with this company is the streamlining of compensation delivery through process and program optimization for the successful and sufficient pay for the employees, as well as, offers the benefits accordingly. This ensures that compensation structure design is in a way that increases company standards for the maximum employee compensation in offering incentives, over-time working hours pay, promotional rewards in terms of managerial positions, and increase in pay as well as, end of year pay incentives for the employees. This fosters the current pay structure towards the successful satisfaction of employee remuneration and compensation expectations. Recommendations for the effectiveness of the discretionary benefits Unlike the established wage rates offered by Safaricom, as well as, the other companies in their pay structures, the discretionary benefits program entails a determination of pay in a fragmented approach (Aguinis, 2009). The discretionary pay procedures entail the company developing programs to involve its employees actively in the various benefits they gain as compensation for their services as they deliver to the company (Mathis & Jackson, 2010). The company in its endeavor to foster employee satisfaction, it incorporates minor packages, called fringe benefits. These are consideration as gained from the profits gained by the company. These are rewards for the employees of the company due to their service to the company, enabling t to gain the successful upward trend in profits. Thus, the company should incorporate the practice of hodgepodge economic rewards to her employees, awarding the employees compensation based on being employees (Mathis & Jackson, 2010). The company, however, should take keen to ensure it facilitates the standards for offering such rewards to employees as claims of unfair treatment and biases may arise from the establishment of such employee rewarding structures. Further, the company in offering discretionary benefits, it should initiate benefit programs such as that of offering protection against hazards and illness coverage or unemployment due to age and disability suffered during the work for her employees. This benefit plan will foster the company towards achieving the optimum employee compensation rates. Additionally, the company offers time off with pay as a discretionary benefit plan, which accommodates the employee’s needs accordingly (Aguinis, 2009). Thus, from these featured benefit plans, the company will engage its employees accordingly towards the satisfactory employee compensations program. Employer-sponsored retirement plans and health insurance programs provided by the company versus those of competitors The company as a privately operating entity complies with the government health and labor laws in which it allows the employees to be members of the National Health Insurance System, in addition to, the National Security Service Fund program. The company contributes accordingly for its employees to gain adequate services of health and retirement plans in these federal agencies. Further, the company, in fostering the aspects of safety and adequate service to its employees to compliment the compensation plans, it is partnering with other insurance companies to allow insurance benefits for its employees. For instance, in its recent establishments, Safaricom partnered with Britam, a multinational insurance company, to facilitate insurance facilities for its employees (The Vodacom Group, 2014). Thus, form these resolutions; the company is engaging accordingly in establishing employee benefit plans for the success of its workers in delivering service. The competitors of the company, such as the Celtel and Telecom companies operating in Kenya as the major competitors to Safaricom also engage accordingly in procedural partnerships to facilitate employee retirement and health insurance programs. However, in view of the operational coverage of Safaricom, the company is expansive and this gives it competitive advantage in fostering such benefit plans to its employees. Therefore, the company offers superior employee retirement and health benefit plans to its competitors, resulting in their success in maintaining high retention and employee motivation rates, from such benefit programs. Conclusion Safaricom continues to trade accordingly in the confines of the federal and private labor laws. Additionally, the company has its internal policies regarding the employee compensation procedures. Thus, from these elemental aspects of the strategies engaged by the company, it continues to prosper in managing the employees accordingly. Further, the company enjoys operational monopoly form the structural establishment of the benefit plans and employee remuneration programs. The company, through its high remuneration rates, successfully compensates its employees. References Aguinis, H. (2009). Performance management. Upper Saddle River, N.J: Pearson Prentice Hall. Mathis, R. L., & Jackson, J. H. (2010). Human resource management. Mason, OH: Thomson/South-western. The Vodacom Group, (2014). Telecommunication Services Sector.14(2). Accessed 21 April 2014 Read More