Human Resources Compensation - Foundations and Perspectives - Assignment Example

Synthesis Assignment Task Job Analysis, Assessment and Compensation The First Topic (Week Conference) A pay model is the structure used by many organizations in determining the pay that they give to their employees. The basic components of a pay model are compensation objectives, the strategic policies forming the foundation of the compensation system, as well as, the techniques of compensation. As such, every organization has to come up with a formidable pay model that will enable it to manage effectively the payment structure and compensation for its employees. It enables the organization to give the right amount of wages where it is due, and as such, offer competitive remuneration structures for its employees based on market standards. The government plays a very important role in the compensation structures of these organizations. In fact, most governments, judging with the financial and economic situation in the country, set a basic minimum wage limit that every employer should give to his employees. Any employer found to be paying his or her workers below the set minimum wage are liable for prosecution. The concept of minimum wage is a prerogative of the government to ensure that every working individual in the country receives a wage rate that matches the current economic situation in the country, all in consideration of reflecting factors such as interest rates and inflation (Argyle & Furnham, 2013). As such, the government comes in to set the minimum wage bill for all employees in the country, and adjusts this on an annual basis based on the economic turn of events within the country. A country that has a poor economic performance, as well as, high rates of inflation usually has a higher rate or level of minimum wage than a country that has a stable economic performance and manageable inflation rates (Bernardin, 2007). The Second Topic (Week 2 Conference) Every organization has to consider the legal implications while handling its employees, and as such, follow the laid down framework for analyzing employment relationships. This is majorly so considering how numerous labor groups, as well as, the international labor organization (ILO), lobby for the protection and safeguarding of the rights and privileges of employees while at their places of work. The protection of the employment relationships as placed within the contract of employment has been, incidentally, at the heart of the ILO’s agendas from as early as mid 1990’s. The employment relationship is the natural evolution of what previously represented the master and servant model in an employment scenario. The employment relationship within the contract model operates as a framework for both protections of workers, as well as, guaranteeing of their exercise of fundamental rights while at the work place. As such, it is important for the employer to uphold and protect the rights and privileges of his or her workers by honoring the employment contract, such as paying them their salaries and wages as agreed, and offering them an opportunity to increase their education through employee training and education programs, as well as, ensuring the working conditions are conducive. Other conditions that an employer should honor in an employee relationship contract is offering employees a paid leave from work every once in a year, and treating them with dignity and respect at the place of work, not as mere servants. The Third Topic (Week 3 Conference) There are two main structures of an organization, egalitarian and hierarchical. As such, organizations in either form use different pay structures in compensating their employees for the work done at these organizations. A hierarchical corporate structure has multiple tiers of management, and as such, an employee may have both supervisors and subordinates. On the other hand, in an egalitarian style company, all employees of the company or organization share equal responsibilities and power. A traditional structure of a hierarchical corporate structure mandated every employee to operate under a specific job description. However, an egalitarian style company eliminates most of these structures. As such, employees in these organizations have general job descriptions rather than specific ones, and instead of reporting to a supervisor, all employees in these companies work collaboratively on task and behave as equals. Consequently, the pay structures are also very different in the two models of organizational structures. in a hierarchical model, the pay of employees is differs in accordance to the level or position that an employee holds within an organization, as such, an employee with a higher rank in the company, such as the CEO or the CFO, will get a higher salary and numerous benefits plus allowances. On the other hand, a simple employee at the lower level of the organization might even operate on a minimum wage rate. In egalitarian organizational structures, the employees in these companies treat each other as equals, and as such, share the same responsibilities, hence warrant the same level of compensations for their duties and responsibilities (Argyle & Furnham, 2013). The Fourth Topic (Week 4 Conference) The supply of labor in an economic situation follows various protocols such as the labor demand and supply side theories. These theories have implications on the supply of labor and its demand within a given market setting. From the worker’s perspective, an individual will supply labor in order to maximize their utility, which is a combination of both income/goods and leisure. The environment these workers face contains a set of jobs at various wage rates and a limit on the number of hours or days for working in a day or a year. Consequently, in order to maximize on utility, an employee will only offer his or her services as a worker under working conditions that will guarantee them maximum satisfaction, such as a good salary and job satisfaction (Gerhart & Rynes, 2003). On the other hand, business firms are also out to maximize their profits by selling goods at a lesser cost than that of producing them, after considering all the inputs or requirements of production, inclusive of labor. Consequently, the demand labor, which involves maximizing output for a given cost while minimizing cost for a given output, dictates the level of compensation that these organizations are ready and willing to offer employees in the market. As such, the implications of this labor demand and supply theory is that employees will not be willing to work for less than what is their worth, while employers will not be willing to hire employees at a cost that compromises their profitability. The Fifth Topic (Week 5 Conference) Designing pay level, mix and pay structures in an organization is a critical role that requires extensive research and consideration of a wide range of factors. Such include identification of the major decisions in establishing an externally competitive pay. Every organization has to ensure that its compensation structures and pay levels match both the market, as well as, government structures or pay models. As such, most organizations make adjustments on the pay of their employees on a regular basis. These adjustments base on the overall movement of pay rates incidence by competition for people in the market, as well as, the ability to pay by organizations, or the terms specified in a contract of employment. In determining a pay structure, most employers will use market surveys to validate their job evaluation results. For instance, a job evaluation survey may place a purchasing assistant’s job at the same level in the job structure as some secretarial jobs (Milkovich, Newman & Gerhart, 2013).  However, an employer may also determine the pay structure, level and pay mix depending on the organizational structure of the company, such as egalitarian and hierarchical. This will enable the employer to set compensation levels for each employee based on their role, duties and responsibilities at the company. On the other hand, external market forces also work in controlling the level of pay, or the pay structures adopted by an employer in compensating his or her employees. These payments should be competitive in order to attract and retain the best minds in the wide pool of employees available at the job market. The Sixth Topic (Week 7 Conference) Employee motivation is very important in maintaining their productivity, as well as, efficiency while at the work place. Most employers use various incentives in order to encourage and motivate their employees to continue discharging their best while at the organization. This is thanks to various motivation theories that provide them with an outline or platform through which they generate various motivation techniques to entice their workers to be more productive and efficient. Such theories include the Alderfer’s ERG (existence, relatedness, growth) theory. This theory stems from Maslow’s hierarchy of needs theory by collapsing the five levels into three categories. Another motivation theory is the Herzberg’s two-factor theory. This theory identifies two major factors as the ones that have a major impact on the motivation of workers at a workstation. These two factors include hygiene factors such as job security, working conditions, salary, organizational policies, and technical quality of supervision. The other factors are satisfiers or motivators, such as salary increment, promotion, allowances, bonuses, commission, praise and recognition. Abraham Maslow’s hierarchy of needs theory has two principles, the deficit principle and the progression principle. The deficit principle states that a satisfied need no longer motivates a certain behavior because most people act to satisfy deprived needs. The progression principle outlines the five needs in a hierarchy, meaning that a need at any level only comes into play after the satisfaction of a lower level of need. Consequently, employers make use of these motivation theories in encouraging their employers to increase their productivity, efficiency, initiative as well as, effectiveness while at the workplace (Bernardin, 2007). The Seventh Topic (Week 8 Conference) Appraisal is the process of evaluating employees based on their performance and rewarding them or punishing them depending on the kind of work they deliver. However, a manger can commit a number of errors while undertaking the appraisal process. These include the halo error, the leniency error, the central tendency error, the recency error, and the personal bias errors. These five are the main and common appraisal errors committed by managers while evaluating their employees. The halo error occurs when the manager rates an employee on several different dimensions while giving similar ratings for each dimension. This is wrong because it kills the essence of objective feedback in the organization, as well as, the concept of honesty (Gerhart & Rynes, 2003). Managers commit the leniency error of appraisal when they give relatively high ratings to virtually every member of the organization within their span of supervision, as opposed to the strictness error where they give low ratings to such employees. The central tendency error occurs when managers lump everyone together around the average, or middle category giving the impression that there are no very good of very poor performers. The recency error occurs when the manager allows recent events to influence their performance appraisal ratings as opposed to earlier events. The personal bias error occurs in a performance appraisal when the expectations and prejudices cause the manager to fail to give an employee complete respect, like racism. The Eighth Topic (Week 9 Conference) A flexible benefit plan lets an employee contribute some of his or her salary to an established account that will cater for or pay for qualified expenses. These deductions occur before the income tax deductions, thereby reducing the tax liability of employees. A flexible spending arrangement or a flexible benefits plan is a type of cafeteria plan whereby an employee incurs a valid expense, and later goes for a reimbursement of the same with the pretax money set aside. However, despite the tax benefits, this flexible benefits plan has several flaws, as well as, pros. Two of the major disadvantages of this benefit plan are the loss risk and the high initial output involved. Loss risk occurs when an employee fails to utilize all of the reserved money within a year, since he or she indicates the amount that they want the employer to deduct from their paycheck annually. As such, if the expenses do not add up to this amount, then the employee loses this money completely (Gomez-Mejia & Werner, 2008). The initial cash output for every employee enrolling for this program is high since the employer takes the designated deduction from the employees’ earnings thereby reducing their take-home income. In addition, the employee has to pay for the qualified expenses from their pockets first before they apply for reimbursement from their benefits account. On the other hand, the advantages of this benefit plan include a healthier staff, recruitment and retention. This plan offers employees health benefits as it enables them have access to insurance, thereby allowing them to go for routine check-ups. Most companies invest in this benefit plan because of recruitment and retention because it enables the business to attract new talent away from competitors whilst keeping existing staff with proven value and skill. This becomes the key bargaining chip of employer, as benefits such as medical insurance and a financial investment account are instrumental to the well-being of employees. The Ninth Topic (Week 10 Conference) An organization usually struggles to come up with the right compensation structures for special groups within the company. Special groups tend to be strategically important to a company. In addition, their positions tend to have built-in conflict that arises because different factions place incompatible demands on member groups. A list of the special groups in an organization includes supervisors, corporate directors, top management executives, professional employees, sales staff, as well as, contingent workers. As such, it is imperative for the organization to examine the right compensation strategies to adopt for each member of the special group within the organization. For instance, the compensation for supervisors can base on a salary that slightly exceeds that of the highest paid employee, as well as, payment on scheduled overtime (Gomez-Mejia & Werner, 2008). On the other hand, the executives within an organization also receive a special kind of pay from the company, inclusive of a base salary, short-term (annual) incentives or bonuses, long-term incentives and capital appreciation plans, executive benefits, and perquisites. The assignment of these remuneration packages to CEOs and other company executives is in line with social comparisons, economic approach, and agency theory. Consequently, it is evident that the organization has to take particular attention when determining the compensation package for each member of the special group within its organizational structure. This is to ensure that the company does not run the risk of losing its valuable employees due to poor compensation packages, and it also does not run into loses due to cost inefficiencies. The Tenth Topic (Week 11 Conference) Global compensation practices differs dues to the various aspects of globalization affecting the management and compensation structures of organizations. This is due to the complicating factors arising while operating on a global scale. For instance, a manager has to deal with diverse standards of living, the cost of living, and the multiple currencies involved in delimitating pay checks to global employees, as well as, keep in mind the exchange rates, tax rates, tax systems, and inflation or deflation rates. Other stringent rules affecting global compensation practices are the need to comply with local compensation practices, laws and regulations, maintenance of a suitable balance between the global consistency and local significance, and addressing organizational business changes, such as investitures, Greenfield operations, joint ventures, expansions, mergers and acquisitions, while accommodating varied employee values and expectations (Milkovich, Newman & Gerhart, 2013).  References Argyle, M. & Furnham, A. (2013). The Psychology of Money. London: Routledge. Bernardin. (2007). Human Resource Management 4E. New Delhi: Mcgraw-Hill Education (India) PVt Limited. Gerhart, B. & Rynes, S. (2003). Compensation: Theory, Evidence, and Strategic Implications. London: SAGE Publications. Gomez-Mejia, L. & Werner, S. (2008). Global Compensation: Foundations and Perspectives. London: Taylor & Francis. Milkovich, G., Newman, J., &Gerhart, B. (2013). Compensation (11th Ed.). New York, NY: Mcgraw-Hill /Irwin. Read More