Organizational Med Compensation Package - Report Example

Organizational Med Compensation Package Compensation systems are designed to attract and retain the skilled and loyal employees. These systems are anexcellent source to encourage and motivate the employees to increase their efforts in order to accomplish the organizational goals (Bergmann and Scarpello, 2001). The rationale behind providing lucrative compensation packages to these employees is that because they exhibit higher level of productivity and they contribute to the success of organization. Furthermore, the return provided by their efforts over-shines the cost of compensation packages. Organizational Med specializes in cost containment and prompt pay for its clients. The company is achieving dramatic growth in its operations and it needs to hire qualified and skilled human resources to sustain its rapid growth. There are three vacant positions namely Knowledge Management Officer, E-Commerce Development Director and Internal Executive/ Management Trainer and we need to design a competitive compensation package for these three positions. The first step here is to understand and analyze the needs of the organization and the prospective employees. Since Organizational Med heavily depends upon the skill of its workforce due to the nature of the business therefore the objective of the organization should be to reward and recognize the performing employees. The best performers should receive the best compensation even for employees having the same job title. In such a competitive era, high performing employees will not tolerate a compensation policy that does not reward them. The company accords recognition to those employees who perform up to the expectations. Therefore the compensation would be fully performance based rather than depending on the age, gender or status of the person. The employee needs assessment is an important concern at this stage. Firstly, we assume here that Organizational Med wants to encourage long-term commitment therefore it would have a much stronger pension and deferred compensation plan at the expense of the current salary. This would be applicable to only two of the jobs; Knowledge Management Officer and Internal Executive/ Management Trainer. The third job of E-Commerce Development Director would be designed to fulfil the short term needs therefore would have a much higher salary. The reason for deploying a short term scope for E-Commerce Development Director is that because he would be simply developing the E-Commerce infrastructure and he would leave the company once his task is finished. Secondly, lifestyle expectations tend to peak for employees when they are in their 40’s and early 50’s. Before this stage of life, employees will somewhat forego a better lifestyle for the promise of career advancement and future earnings (Sharpnack 2007). Hence, we will also assume that the compensation packages for three jobs would be competitive as the candidates for this position would be mostly in their early 50’s. We have conducted a market assessment of compensation as this is a vital stage in designing your compensation package. Some of the tools that were used to gain an understanding of market compensation are market salary reports, which are used to determine the going market pay rate in similar companies and industries (Massad 2005). We can also assume that since Organizational med is experiencing growth at a blistering pace therefore they would not be facing special difficulties with regard to budget and financial resources. Hence, they are willing to provide a better compensation package to their human resources than the average market. Here we can also ascertain that all the three position created by the company are of high level therefore the compensation package enjoyed by them will be almost identical and equal in proportion with certain exceptions that would be described later. Knowledge Management Officer A knowledge management officer (KMO) is responsible for gathering and exploiting the company’s implicit and explicit knowledge. He promotes and develops the organizational knowledge repository by persuading the people about the benefits of knowledge sharing. With an organization like Organizational Med, I believe that Knowledge management officer has the most crucial tasks in hand because it is the knowledge of an organization which brings prosperity in the long term. Hence, to hire the most skilled KMO, Organizational Med needs to design the most competitive package for his position. Here are the details of KMO Compensation Package: (i) The base salary of the KMO will be $90,000 per annum. Base salary can be considered as the fixed compensation paid to the employee based on his job responsibilities but it also varies with the level of performance. (ii) The variable payment for KMO includes bonuses and recognition awards. If the employee demonstrates job performance and productivity that is above what is normally expected than he must be rewarded additionally with a lump sump payment or other incentives. (iii) The KMO will also be paid for the time he/she has not worked. Some specific instances of pay for time not worked include Vacations granted to the employee, Sick leave, Holidays, Family and Medical Leave, Emergency Leave, Paid time off to serve on a jury duty, Time off for those employees who demonstrate outstanding performance, Training hours, events organized by the company and rest periods of short intervals. (iv) The most attractive part of KMO compensation plan includes the company paid Life, Health and Dental insurance. Organizational Med will be fully responsible for the costs of employee, his/her spouse and dependants for all three insurance plans. This would be the best benefit program in the industry. A part from that a strong Retirement and Pension program would also be provided to the KMO which will pay them substantial sum of money in annuity in the near future. (v) The Deferred Compensation program will also be provided to the KMO due to the company’s long term commitment policy. It will provide tax relief’s to the KMO which will be bore by the company. (vi) Certain professional expenses would also be met by the Organizational Med Company such as car allowance, club membership, travel expenses etc. These packages have been designed by gathering information about the market rates and the salary of KMO has been kept at a lower side because he has been provided more fringe benefits and the compensation package has been designed in the view of the fact that he will be receiving better compensation in the future. Since Organizational Med will be appealing to the global workforce therefore it can hire expatriates for its available positions. The compensation system of expatriates significantly differs from the compensation of local people. The literature reveals that no other variable has a greater impact on expatriate compensation than the cost of living in the host country (Overman, 2000). Therefore, the compensation package of the available positions would be slightly changed by incorporating packages such as cost of living allowance, foreign taxes exemption and child care costs at the expense of the current salary. Hence, the base salary of the expatriates would be reduced while fringe benefits such as housing allowance shall be increased. E-Commerce Development Director The compensation package of E-Commerce Development Director would be the same as KMO except the policy of short-term focus. There can be a short term contract of 2 or 3 years with the E-Commerce Development Director. His base salary would be increased to $110,000 while fringe benefits such as deferred compensation plan and other allowances would be reduced by a balanced amount. Internal Executive/Management Trainee The person in charge of Management Trainee would be responsible for designing and delivering internal training. His base salary would be $70,000 and the compensation package would be almost similar to KMO with some variation. The professional expenses of Management trainee would be increased due to the nature of his work. We can deduce from the above report that designing the compensation package is the most vital element of human resource management especially for an organization like Organizational Med which is entirely dependent on the skills of its workforce to satisfy the requirement of its customers. Furthermore, it is quite challenging to design an identical package for all the job positions because all of the positions have different needs and specifications and there demands are diverse in nature. BIBLIOGRAPHY Bergmann, T.J. and Scarpello, V. G. 2001, Compensation Decision Making, Harcourt, Forth Worth, TX. Massad, M. 2005, Creating a Smart Compensation Package [Accessed 24th December 2008]. Available from World Wide Web: Overman, S. 2000, “In sync: focus on international HR”, HR Magazine, Vol. 45, pp. 86-92. Sharpnack, R. 2007, Does It Really Matter How Employees Are Paid? [Accessed 24th December 2008]. Available from World Wide Web: Read More