Issues Related to Challenges Faced in Compensation and Benefit Systems in Organizations - Case Study Example

Compensation and Benefits Systems Table of Contents Introduction 3 Boehringer Ingelheim Corporation 3 A Brief Historical View of the Organization 3 Assessment of Company’s Compensation and Benefit System Challenge 4 A Review of another Organization with Similar Challenge 6 Hong Kong Polytechnic University 6 Review of the literature 6 Recommendation to Management on How to Resolve the Situation 7 Implications of the literature 9 Implication of outsourcing Option 9 Implications of Software as a service (SaaS) 9 Implications of adopting human resource information system 10 Conclusion 11 References 12 Compensation and Benefits Systems I. Introduction a) Boehringer Ingelheim Corporation Boehringer Ingelheim is a German corporation, which focuses on manufacturing pharmaceutical products in different countries around the world (Bohlander & Snell, 2009). Moreover, this company applies their innovativeness in offering value to their employees, customers and the society; in fact, this company is dedicated to selling over-counter drugs and prescription. For instance, they offer prescription drugs for treating respiratory illness, HIV, hypertension and others. The parent company of Boehringer Ingelheim is C.H. Boehringer Sohn; in fact, they have affiliates such as Boehringer Ingelheim USA Corporation (Icon Group International, 2000). Nevertheless, this paper focuses on exploring compensation and benefit challenge faced by Boehringer Ingelheim Inc., and other recommendations for addressing this situation. Therefore, by achieving objectives in this research, the paper will make a substantial contribution to training literatures regarding compensation and benefit system. II. A Brief Historical View of the Organization Boehringer Ingelheim Company was established at Ingelheim am Rhein in 1885 by Albert Boehringer; In fact, during this period, this company had capacity to employ twenty-eight employees in Nieder-Ingelheim. Nevertheless, this company has grown over the years to become a multinational corporation, thereby supplying pharmaceuticals to consumers from different countries around the world. Moreover, this company has a primary focus on various therapeutic areas such as respiratory, virological, metabolic, cardiovascular diseases, and other diseases that affect the central nervous system. In addition, the company has been actively involved in numerous research and development programs aimed at drugs and fine chemicals innovations. III. Assessment of Company’s Compensation and Benefit System Challenges In Boehringer Ingelheim Company, five years ago, their human resource system was decentralized. In this case, company’s human resource system was serving employees from different locations. Therefore, processes involved in offering human resource services to employees were disorganized because these human resource departments were managed by small groups of staff members. Besides, these groups were dedicated to oversee functions of human resource departments in Boehringer Ingelheim, and they could offer support to employees in this company, but they were not efficient. In fact, their inefficiency was caused by lack of required training and human resource tools, which were needed to improve their efficiency. Furthermore, this company experienced numerous errors within their compensation and benefit system, and inconsistency in the process of handling inquiries from their employees. Moreover, company management did not have a solution to these problems; in fact, they were undecided on whether to undertake strategies such as training or hiring more staff to solve these challenges (Icon Group International, 2000). The company management came up with an idea of seeking guidance from an expert in the field of human resource in order to facilitate positive transformation of company’s operations. In this case, the Watson Wyatt Company was chosen as partner experts due to their experience and in-depth knowledge in the field of human resource, which would facilitate development and implementation of transformation project for the company. Therefore, Boehringer Ingelheim collaborated with Watson Wyatt as external partner in the process of dealing with challenges in compensation and benefit system. The transformation project began with review of human resource department by a team from Watson Wyatt. In fact, this review was focused on structure, operations and their processes. For instance, they reviewed processes that facilitated flow of information, responsibilities taken by members of staff and their roles. In addition, there was a review of training requirements for the members of staff and the integration of human resource operations with technology (Icon Group International, 2000). On the other hand, this review involved key stakeholders of the company with an aim of indentifying crucial issues and causes of errors in the process of data entry, which were experienced in compensation and benefits system. Watson Wyatt team discovered that the company had not allocated adequate time to support their employees due to decentralization of in human resource department. Other findings indicated that this company had increased errors in human resource department, which derailed processes of disseminating accurate and timely information to stakeholders. The team of experts from Watson Wyatt decided that they had to centralize the human resource department in a way that conformed to Boehringer Ingelheim organization’s culture. In fact, this gave advantage to this company by enhancing ways of maintaining employee’s personal information. Moreover, the company was able to facilitate significant change through definition of responsibilities roles, and by implementing an organization model to enable sharing of resources in human resource department (Icon Group International, 2000). In addition, ways of communication among members of staff were changed by management, and various processes were redesigned in way that could support integration of technological tools in human resource technology department. IV. A Review of another Organization with Similar Challenge a) Hong Kong Polytechnic University Hong Kong Polytechnic University was another organization, which had similar experience of difficulties in their compensation and benefit system. In fact, this organization had made a decision of reducing errors experienced during the process of data entry by implementation of information systems. This implementation process involved adoption of a software application by human resource department in order to facilitate handling of employee’s personal information (InfoWorld, 2007). Moreover, this system was implemented to offer a wide range of services to the organization such as benefits and payroll breakdown and comparing positions of applications. This system facilitated processes of arranging employee data in a web application, which was connected to human resource databases. Therefore, numerous processes that required human intervention were automated in order to decrease human errors. Besides, human resource department gained capacity to conduct analysis on integrated and complex data, which was gathered from different sources of information in their organization (InfoWorld, 2007). Nonetheless, this led to realization by various manufacturing companies in Hong Kong that integration of technology in human resource department would increase their efficiency. In fact, adoption of information systems by Hong Kong Polytechnic University in their human resource department led to alternation of their management processes; thus, this led to reduction of errors, which had caused challenges in their compensation and benefit system. V. Review of the literature Martocchio (2011) suggests that the best solution for dealing with challenges faced by organization in their compensation and benefit system is adoption of information system. Moreover, Pynes (2008) explains that human resource information system in an organization facilitates automation of payroll processing, recruitment processes and handling of employees’ personal information. In fact, various processes in human resource department require integration of information gathered from different departments in the organization. Therefore, this requires a high level of integrity and transparency, which is facilitated by adoption of information systems. In addition, this enables the organization to be compliant to payroll tax laws and legislation. Integration of information system enables manipulation of employee records from a single database, which leads to reduction of errors. Moreover, different departments are able to share information from the same database, and they can enter data and update relevant information with minimum errors. In fact, this eliminates redundancy of employees’ records in compensation and benefit systems, which caused challenges. It also avoids wastage of resources such as time and money through calculation of employee compensation and benefits matching these details with attendance records (Pynes, 2008). According to Martocchio (2011), adoption of human resource information systems has proofed to be very helpful to numerous organizations, especially in areas dealing with compensation and benefits. Nevertheless, there are challenges experienced in processes of determining most suitable system to match organization’s needs, while considering their budget constraints. In this situation, an organization is faced with numerous alternatives, which are designed to meet their needs. However, there are implications experienced through adoption of these systems such as complication of selection process in human resource department (Martocchio, 2011). Therefore, organizations seeking to adopt information systems in human resource department are expected to simplify their expectations for the best solution (Martocchio, 2011). VI. Recommendation to Management on How to Resolve the Situation In order to deal with challenges faced through compensation and benefits systems in an organization, there is need to consider implementing Software as a service (SaaS). SaaS is a web based distribution model, which facilitates web services and oriented architecture (Goel, 2003). In fact, this is involves using a software that is hosted externally by the vendor. Moreover, this can be a favorable option to an organization seeking to avoid high expenses incurred in developing in-house software application. In fact, by implementing SaaS, costs incurred through installation, maintenance can be avoided and reliance on organization’s IT department can be reduced. Therefore, software as a service offers effective accessibility to information system resources through the web, while the vendor takes roles of system maintenance and upgrading these applications (Goel, 2003). On the other hand, an organization can consider outsourcing alternative to their human resource information system. Moreover, a company is recommended to outsource their human resource department to another company, which has required expertise. In fact, numerous medium and small size businesses have benefited significantly from adopting this option, because it facilitates growth and development. Furthermore, this option have proofed to be economical to numerous organizations, thereby saving approximately ten percent of their total operating cost incurred through human resource department (Bohlander & Snell, 2009). In this case, human resource management in Boehringer Ingelheim can focus on integrating their operations with technology by adopting a human resource information system, which can facilitate reduction of errors in compensation and benefit system. Moreover, adoption of human resource information system can improve processes of handling employee’s data in order to for human resource department to be more organized and orderly while dealing with compensation and benefits systems. Therefore, numerous alternatives can be taken by this organization in order to deal with these challenges. However, Chanda, et al (2007) explains that an organization is required to evaluate these options by conducting a cost-benefit analysis, which can assist in determining alternatives that can meet their need. VII. Implications of the literature a) Implication of outsourcing Option Outsourcing as option of to deal with challenges in compensation and benefit system was suggested by Goel in, “Computer Applications in Management.” However, after analyzing the idea of outsourcing, I discovered that there are both positive and negative implications involved. For instance, there are positive implications associated with elimination of errors, in compensation and benefit system, which can reduce inconveniences experienced in human resource department. Moreover, this can also enable to organization to avoid expenses associated with taking other options such as developing in-house application software. On the other hand, the negative implications of outsourcing involve compromising the quality of services offered to employees by human resource department in an organization. In addition, because outsourcing of human resource department requires employees’ personal information to be handled by a third party, this can result to data privacy issues. Therefore, organizations should to conduct a feasibility analysis on other available alternative before considering outsourcing as a suitable option. In fact, Bohlander & Snell (2007) explains that having inadequate provision of employees’ data privacy is a breach of their right to confidentiality aimed at protecting their personal information. b) Implications of Software as a service (SaaS) Software as a service is an option suggested by Chanda, Krishna and Shen in “Strategic Human Resource Technologies: Keys to managing People”; in fact, through analysis of ideas, I did not establish any negative implications associated with implementation of ideas from this book. In this case, I realized that SaaS has been one of the best options due to cost-effectiveness and increased data security. In this case, given that this software is operated by the organization involved, employees’ data is secured. In addition, the organization is able to transfer burden of information system maintenance through application of software as a service to the vendor. c) Implications of adopting human resource information system Martocchio in “Strategic Compensation: A Human Resource Management Approach” explains that cohesion and efficiency is increased through adoption of human resource information system. Analysis of ideas presented by this book indicated that there are numerous positive implication associated with adoption of information technology in human resource department by developing in-house software. For instance, by implementing ideas from this book, managers can increase performance in their human resource department; thereby, dealing with errors causing challenges in compensation and benefit systems Moreover, these ideas can facilitate a transformational process, which can enable human resource information systems to operate efficiently with minimum errors. On the other hand, a deeper analysis of ideas indicates that by implementing human resource information system, there are chances of experiencing challenges caused by resistance to changes from members of staff due to lack of required technological expertise or skills. VIII. Conclusion The paper has explored issues related to challenges faced in compensation and benefit systems in organizations. In fact, Boehringer Ingelheim Corporation is an example that has been analyzed to understand these challenges. Furthermore, Hong Kong Polytechnic University was analyzed as example of an organization that has experienced similar problem with their compensation and benefit system. The other section of the paper covered a literature review, through which ideas regarding benefits and compensation challenges are gathered and presented to support arguments in this paper. On the other hand, this paper offered various proposals as solutions that can be implemented by human resource departments to deal with these challenges. Furthermore, the paper has explored implications of literatures that have been reviewed based on ideas gathered from them. Therefore, this paper has managed to make a significant contribution to various training literatures regarding compensation and benefit system by achieving objectives set through the thesis statement. In this case, the paper gathered relevant ideas to support integration of technology through adoption of information system as a way dealing with compensation and benefit system challenges faced by organizations. References Bohlander, G. & Snell, S. (2009). Managing Human Resources. (15th Ed.). Independence, KY: Cengage Learning Chanda, A., Krishna, B. S. & Shen, J. (2007). Strategic Human Resource Technologies: Keys to managing People. Thousand Oaks, CA: Sage Goel, R. (2003). Computer Applications in Management. New Delhi: New Age International Icon Group International. (2000). Boehringer Ingelheim: International Competitive Benchmarks and Financial Gap Analysis. San Diego: Icon Group International InfoWorld (2007). Introducing Invisible PC. San Francisco: InfoWorld Media Group, Inc, Martocchio, J. J. (2011). Strategic Compensation: A Human Resource Management Approach, (6th Ed.). Upper Saddle River, NJ: Prentice Hall Mohapatra (2007). Business Process Automation. New Delhi: PHI Learning Pvt. Ltd. Pynes, J. E. (2008). Human Resources Management for Public and Nonprofit Organizations: A strategic Approach. (3rd Ed.). Hoboken, NJ: John Wiley and Sons Read More