Career Development Plan Compensation - Assignment Example

RUNNING HEAD: CAREER DEVELOPMENT PLAN – COMPENSATION Introduction: Employees are provided with rewards as a payment for the job or work that they have performed for the company. Employee receives both extrinsic and monetary rewards in the form of compensation and this is in exchange of the work done for the company. The incentives are structured based on employees’ interests, the total system becomes equitable. David McClelland’s Achievement Motivation Model infers that individuals with strong achievement motive persist longer in achievement related activities and tend to relate success and failure to their own efforts. Achievement Motivation is closely associated with company growth rates rather than power or affiliation motivation. The compensation plans of a company generally include the policies, procedures and also all the rules that are needed. These help ensuring a clear determination and administration of the compensation. Also as seen the incentives play a major role in the employee satisfaction, hence an extra effort to keep this clear is always beneficial for the company as well (Fitz-enz, 2000). Compensation Plan: Based on all the reading and understanding of the various factors effecting employee motivation, the following compensation plan can be used as a consideration for the company (Kessler, 1994). The following aspects need to be clear in terms of the plan, a) the employee salary packages need to be at a moderate level and need to based on the skills, and job and also on the performance of the employee as well. Also the annual review of the employees will be the period where they can expect a raise, but this is based on the performance of the employee along with the overall performance of the company as well, if the company does well, the employees can also expect higher levels of bonuses as well, b) the employee should be able to see the main vision of the company and need to work on reduction of costs and also higher customer acquisition and retention as well, c) monthly ‘Best Performer’ awards can be announced and this will motivate the employees with strong achievement motives, to work harder, d) Health benefits, pension plans, and stock options, will also be provided to the employees. In short the main aim of the payment plan is to reward the employees based on the performance and also the levels of the job. The benefits like mentioned in the last point however will be available to all. Benefits of the plan: There are several benefits that can be expected from this plan. The use of the performance related pay plans can be very helpful for the company and comes along with a number of positive aspects as well. It was noted that performance related pay has proved to be useful for managerial staff since it allows them to be able to set goals that need to be achieved. This makes them motivated to work towards the goals as performance related pay ensures them of a reward on achievement of the goals. The principle of relating pay and performance has been very useful and has acted as a good motivator. There are a number of reasons why companies decide to link pay to performance. A few of the basic objectives are as follows: Improved Motivation: Famous authors and researchers like Lawler, Porter, and Vroom have pioneered psychological theories of expectancy. The theory should a simple relationship between the efforts put in by an employee, the rewards, the motivation of the employee and the possibility of gaining if the required amount of efforts is made. The theory highlighted conditions that are needed for the schemes to be motivating to the employees. These conditions also pointed out the possible failures and pitfalls. It was shown that an employee’s efforts may lead to better performance for a lot of reasons like bad management and lack of skills. Similarly if the efforts and performance is not correctly measured by the management it could lead to the employees not receiving what they deserve. Also budgetary constraints played an important role for the rewards to given to employees who put in the efforts. All these and a lot of other factors were discussed by the authors. All the possible obstacles between an employee’s performance, efforts and rewards were highlighted by the authors. Improved Goal Setting: Another approach is that for the reasons of relating performance and pay is provided from the Goal Setting theory. It has been studied that the setting of goals has proven to be a sure shot method of improving performance. It is essential that each employee is set with a goal to be achieved to ensure full commitment and contribution from the employee. However it has also been noticed that how an employee’s goal is set influences the level of contribution of the employee to the company. It has been seen that if an employee is closely involved in setting the goal, the employee not only accepts the goal but ensure it is completed with perfection like their own. The theory of an employee being completely involved in the decision making of the goals to be set, would make the employee more related to the project thus improving the performance as well as ensure the goal is completed in time and perfectly. Improved hiring: Performance related pay is a different approach to paying employees, thus it also attracts different kind of recruits to the company. It has been noted in recent studies that a large portion of the improved productivity is based on output based pay. The employees who fit into this category of people are often applicants who have a urge to produce more to be able to earn a higher pay. Renegotiating the effort bargain: Every organisation and all managers have a fair idea o what a fair day’s work would comprise, the total number of hours a person can work. While setting goals for an employee this needs to be kept in mind by managers. Even though this is unwritten, it is still a very powerful force which regulates management control for pace and nature of work being assigned. While companies do introduce the scheme into the system it is essential that the managers make a note of the number of people who are for the payment scheme and those who are against. There needs to be a percentage of employees the management need to set to be able to introduce the new scheme. This plays a major role in the performance of the employees. Packages Components to Motivate Employees: This method can be very beneficial and can motivate the employees to a great extent. It is however up to the managers to help the employees recognize this. Also with a bonus and reward system so strong, the motivation will improve for itself and will encourage all to work better (Weightman, 2004). Also, the flexibility in the reward systems will allow the company to ensure that all employees are given their right share in terms of performance as well as ill behavior or underperformance. This will help create a sense of fairness and will bring about higher levels of discipline within the organization (Beer and Spector, 1985). Conducting performance appraisals on a regular basis helps the employer provide the employee with feedback and advice on how to improve in areas that require correction. This is the best way to communicate any strength the employees have and also to discuss the weaknesses and provide possible solutions. Since most of the performance appraisals are very open and it allows employees to rate their supervisors as well. This allows a better understanding and better relationship among the employer and employee. Employer – Employee Benefits: If the employees are able to understand the seriousness of the pay system, i.e. if the managers are able to rightly communicate this to the employees, then the employers as well as the employees will be faced with higher levels of benefits (Monks, K., 1997). These can include, a) better performance from the employee, which would lead to better results for the company, b) better result for the company would lead to higher levels of bonus to the employees, which would help increase the motivation to higher levels, c) with the need to improve and cut costs for the processes, the employees will also be a part of the company and will be able to improve the performance and loyalty towards the company (Podmoroff, D.B.A., 2005). Conclusions: Based on the above report it is clear that the integration of this type of payment system will allow the employees to be highly motivated, as well as allow the company to earn much higher levels of profits (DeSilva, 1998). Hence this compensation plan can create a win – win situation for both the employee as well as the company. Inter Clean will be faced with a high level of motivation and productivity of its employees and there will be a direct impact that can be noted in terms of the overall productivity of the company and the results that the employees will bring to the company. Bibliography Beer, M., and Spector, B., 1985, ‘Corporate – wide transformations in human resource management’, in Buchanan D. and Huczynski A., 2004, ‘Organizational Behavior’, 5th edition, Prentice Hall, Essex Buchanan D. and Huczynski A., 2004, Organizational behavior, 5th edn, Prentice Hall, Essex DeSilva, S., 1998, ‘An Introduction to Performance and Skill – Based Pay Systems’, International Labour Office, Bureau for Employers’ Activities Fitz-enz, Jac, 2000, 'The ROI of Human Capital: Measuring the Economic Value of Employee Performance' 1st edition, AMACOM Kessler, I., 1994, ‘Performance Pay’, In Sisson, K. (ed), ‘Personnel Management’, Oxford, Blackwell Monks, K., 1997, ‘Performance Related Pay: What makes a Successful Scheme’, DCUBS Research Papers, 1996 – 1997, No. 18 Podmoroff, D.B.A., 2005, '365 Ways to Motivate and Reward Your Employees Every Day: With Little or No Money', 30 September 2005, Atlantic Publishing Company Weightman, J., 2004, ‘Managing People’, 2nd edition, Chartered Institute of Personnel and Development, 2004, CIPD Publishing, London Read More