Enhancing Employee Satisfaction through Human Resource Practices - Literature review Example

Enhancing Employee Satisfaction through Human Resource Practices Your school Enhancing Employee Satisfaction through Human Resource Practices The key to an organization’s success often lies in the satisfaction of its employees (Hiam, 1999). Satisfaction of employees is connected to many positive organizational outcomes, including higher performance and lower turnover (Hiam, 1999). To achieve employee satisfaction, it is particularly important that the workplace is a positive one where employees feel respected and valued (Hiam, 1999). While there are many practices which a Human Resources department can implement which will create this positive, employee-focused atmosphere, this paper will focus on three in particular: pay-for-performance plans, flexible working conditions, and employee benefits. Pay-for-performance plans are both fundamental and important for employee satisfaction (Milkovich & Newman, 2005). Pay-for-performance occurs when employee compensation reflects to some degree that employee’s performance. The argument advocating pay-for-performance is that employees who perform to higher levels make a greater contribution to the organization and thus deserve a higher compensation. Motivationally, pay-for-performance is an excellent tool, as now employees can see a connection between the level of their performance and the level of their compensation; if they want to earn a higher compensation, the logical thing to do is to try to perform to higher levels (Milkovich & Newman, 2005). Pay-for-performance usually incorporates two different types of pay forms. Individual incentives reward quantified (easily measurable) performance (Milkovich & Newman, 2005), such as the number of units manufactured (piece work), the amount of sales per month (commission structures), or the percentage decrease in overhead per quarter (bonus). Of course, these are only examples, but they illustrate the different ways that individual incentives can be used. However, the performance of most employees is not something that can easily be measured. Take for example an office receptionist or a call-center manager. There are many things that are important about these jobs, but yet to determine how well an employee is completing his or her job is not as simple as looking at a bunch of numbers. For most jobs, performance is much more qualitative rather than quantitative (Milkovich & Newman, 2005). Performance appraisals have been developed to measure qualitative performance. The other main pay forms connected to pay-for-performance are those which are connected to performance appraisals, and which result from the performance appraisal process. In the performance appraisal process, a performance appraisal form is developed which asks a rater (usually the employee’s supervisor) to assess the employee’s performance in key areas. Based on this assessment, the employee will either receive a merit pay increase to the base salary, or a lump sum bonus based on the overall performance rating achieved by the employee (Milkovich & Newman, 2005). By using a performance appraisal process, it is still possible to connect the level of employee performance to that employee’s level of compensation. One key to maximizing the motivational power of pay-for-performance is to make sure that the employee knows ahead of time how his or her performance will be measured. In the case of individual incentives, this is quite simple. When performance appraisals are used, the key is to make the performance appraisal form available to the employees. By looking at this form, the employee can see by which criteria his or her performance will be measured. Employees are then more likely to focus on doing these things well. By carefully selecting criteria which reflect what is most important about a job as well as what is important for the success of the organization, the Human Resource department can motivate employees not only for higher performance, but can also influence their on-the-job behaviors. It is a powerful tool. Pay-for-performance is also appreciated by the employees. Employees who perform to higher levels may feel it is unfair if they are paid the same as employees who perform to lower levels; in this way a lack of a pay-for-performance system can actually de-incentive high performance (Milkovich & Newman, 2005). But with a pay-for-performance system, employees feel more fairly treated (i.e. employees who perform to higher levels make more than employees who perform to lower levels) and also feel more valued by the organization (that the organization recognizes their contribution to the organization and rewards them for that). Another HR policy that organizations can implement in order to create a positive, employee-focused workplace is to offer flexible working arrangements. Flexible working arrangements normally fall underneath the umbrella of “work-life balance” programs, because they help an employee to balance the demands of their private life with the demands of their personal life (Murphy, 2009). There are many types of flexible working arrangements, including flexible working hours (employees can decide which 8 hour period of time they work each day), tele-commuting (working from home via the internet and phone), job sharing (dividing one full-time job between two part-time employees), and adjusted work schedules (working longer some days to have other days off or reduced hours during those days). Employees like and enjoy having the possibility of flexible working options. Research shows that many employees take advantage of this opportunity and also consider it to be a big advantage of working for a particular company (something which helps the company attract and keep its employees) (Zingheim & Schuster, 2000). As long as the organization thinks through for which jobs flexible working arrangements will be offered, there are positive effects for the organization as well. As just mentioned, employees value this option, which results in an overall more satisfied and productive workforce. Offering something that employees value helps the company to be more competitive in the labor market, helping it to successfully recruit and retain high-quality employees (Zingheim & Schuster, 2000). Some organizations also find that offering flexible working arrangements also helps them to better staff their organizations while reducing overtime (Murphy, 2009). A third practice that a HR department can implement in order to create a positive, employee-focused workplace is to provide employee benefits. Benefits can be substantial and fundamental to an employee’s satisfaction (for example subsidized child-care) or can take the form of perks (for example free donuts in the break room every Friday morning). Benefits are perceived by the employee as demonstrating that the organization cares about its employees (Beam & McFadden, 2005). Employees feel better taken care of, and thus feel more positively about their employer. A recent trend in employee benefits is to offer what are called Cafeteria Plans (Beam & McFadden, 2005). Cafeteria Plans offer a wide choice of benefits to the employee along with an allocated monetary amount that the company is willing to pay for each employee’s benefits. Employees are able to select which benefits they most value (for example, some may value life insurance while others may value subsidized child care) and also to select the level of coverage for some benefits, particularly supplemental insurances (life, disability, medical, etc.). If the employee selects options which result in an overall cost which is lower than the monetary amount allocated by the company, the difference is rebated to the employee over the course of the year; if the employee selects options which results in an overall cost which is higher than the monetary amount allocated by the company, the difference is divided over the number of pay periods in a year and automatically deducted from employee pay. Even if the employee has to pay for a portion of the cost of a benefit, it is usually worth it for the employee. Organizations usually negotiate a group discount, so the cost to an employee will almost always be less than if the employee him or herself purchased the same benefit coverage on his or her own (Beam & McFadden, 2005). Many companies are taking this to a new level by offering discounts to their employees although the company itself is not covering any of the cost of the benefit (Murphy, 2009). For example, a company may contact a provider of car insurance and obtain a group discount which it will then make available to its employees. There is no cost to the employer, the employees are getting a discount so they are happy, and the car insurance company is gaining many new customers so it is happy. Overall, employee benefits have to provide for two things: to promote the well-being and security of the employee (ex. health insurance, life insurance), commonly known as passive benefits, and to provide benefits that the employees perceive as nice extras (ex. free health club membership, discounted laundry service with daily pick-up and delivery to the place of work), commonly known as active benefits (Beam & McFadden, 2005). Organizations should use benefits surveys to find out which benefits their employees value and then focus on providing the combination of benefits which will be highly valued by its employees but which is also affordable for the company. By tailoring the benefits the organization offers to the needs of its current and potential employees, an organization can gain an advantage over the competition in attracting and retaining the employees it needs to be successful. This paper has highlighted some of the many ways that a HR department can implement practices which positively enhance the organization’s employees. Through incentivizing performance, offering flexible working arrangements, and offering the right combination of benefits, an organization can create a positive, employee-focused workplace, which will in turn increase the satisfaction of its employees. As employee satisfaction has been linked to a number of positive workplace outcomes, these practices serve to benefit not only the employee, but the organization as well. References Beam, B.T.,Jr. & McFadden, J.J. (2005). Employee benefits (7th ed.). Chicago: Dearborn. Hiam, A. (1999). Motivating and rewarding employees. Hollbrook, MA: Adams Media. Milkovich, G.T. & Newman, J.M. (2005). Compensation (8th ed.). New York: McGraw-Hill Higher Education. Murphy, T.E. (2009). Benefits and beyond: a comprehensive and strategic guide to retirement, health care, and more. Newbury Park, CA: Sage. Zingheim, P.A. & Schuster, J.R. (2000). Pay people right!: Breakthrough reward strategies to create great companies. San Francisco: Jossey-Bass. Read More