Performance-Based Compensation System - Essay Example

Performance-Based Compensation System Affiliation Introduction A compensation system refers The compensation system is the vital element of the human resource department of a particular organization in different sectors of the economy. The human resource managers utilize an effective compensation system to achieve their objectives in a particular organization. According to research, employees’ compensation is one of the major physical indicators of the relationship between the employer and the workers. In this case, compensation is the primary issue the employee and employers exchange in a certain industry (Rosenbloom, 2009). An effective compensation system is crucial in the medical field because of various reasons. First, the health sector is among the most sensitive industries in a particular economy because it deals directly with the welfare of the population (Abernathy, 2011). An effective compensation system in the field of health promotes efficiency among the workers that are essential in enhancing the quality of the patients. Various parties in the health sector should be compensated effectively to promote their motivation and mind consciousness. Secondly, an effective compensation highlights various aspects of the employees such as skills, experience and position. Indication of the characteristics and elements of the employment creates a sense of understanding among the employees. The employees can understand the reason for the variance in their compensation package that enhances the level of job satisfaction in a particular workplace. Thirdly, an effective compensation structure defines the specific remunerations and benefits of the employees, which is vital in minimizing conflicts between the employers and the employees regarding the compensation. The health sector is high sensitive when compared to other sectors of a particular economy (Senger, 2010). The safety and quality of healthcare services depend on the qualifications and satisfaction of the health practitioners. The paper examines various factors that are considered when developing a compensation system in a healthcare organization. The objective of any organization is maximizing profits in their operation that is facilitated by the effort of the employees. The compensation system in a particular organization enhances performance among the employees. Moreover, an effective compensation system enables an organization to obtain the best results from the employees. Designing a reliable and effective compensation is crucial in the management of the resource department in a particular organization. The healthcare industry requires an effective management of the human resource section to enhance performance and motivation. In this case, the human resource management should focus on various factors when designing a compensation system that encourages performance in the organization. The health field comprises of different types of the job position that require different qualifications and experience. The compensation system creation process for an organization operating the health field should consider various factors to promote efficiency and performance among the employees (Rosenbloom, 2009). The system should promote equality among the employees in the different department in order to enhance performance among the employees. In addition, the human resource management in the health sector should embrace the concept of motivation to facilitate the quality of the employees services. Motivation promotes commitment and efficiency in the workplace that facilitates performance. Factors to Consider When Designing a Compensation System An effective compensation system comprises of various elements such as the position of the employee, level of skills, working hours and the philosophy of the system. Various factors are considered when creating an effective compensation system such as Budget allocation, revenue of the organization, the position of the employee and achievement of the pre-determined goals. Furthermore, type of health care facility, compliance with the law and benefits package are major factors in the development of an effective compensation system. Other factors include salary ranges, and working conditions of the employees are essential factors that are considered when developing a compensation strategy in an organization in the healthcare field (Teleki, 2009). Budget Allocation Budget allocations for compensation are one of the primary factors to consider when designing a compensation strategy. The budget allocation for salaries and benefits varies depending on the amount of income in a particular organization. In this case, organizations with high returns allocate a higher percentage of their budget to compensation than those with low returns. The compensation plan should encompass the health facility’s strategy for allocating the cash for compensation into benefits and salaries. The percentage of the total amount that the organization spends on benefits and salaries is essential in establishing an effective compensation (Melbinger, 2010). The criterion for considering the budget allocation for compensation is important because it prevents the organization from budgetary strains. It is essential to consider the budgetary allocation for benefits and salaries in a particular organization because it enables the designer of the system to establish the level of skills for the employees in the organization. In addition, the planner of the compensation system evaluates the criteria of recruitment in the organization in order to tap the most qualified individuals in the field (Abernathy, 2011). An organization with adequate returns can maximize the benefits and salaries of the employees in order to attract highly skilled and effective individuals in the health sector. For instance, for a $10000 for compensation, if 80% is salary is 20% benefits, the 20% is spent in various ways. In this case, 12% is spent on health benefits, 6% on retirement benefits and 2% is spent on reimbursement of tuition. The budget allocation for compensation is a crucial determinant factor in the development of compensation system in a health organization because it promotes equitable distribution of financial resources to various benefits and salaries (Senger, 2010). Legal Compliance An effective compensation system should entail the legal requirements regarding provision of benefits and salaries to the employees. Various countries have different requirements regarding compensation of employees. The requirement is in place to promote equality and efficiency in the process of compensating workers in various fields in the economy. It is essential to examine the laws and regulations of a particular country regarding different aspects of compensation in order to avoid future conflict between the guidelines of the compensation system and constitution. Adherence to the constitutional requirement regarding compensations enables the organization to promote job satisfaction among the workers that are crucial for effective performance. The health sector operates under various legal regulations because it deals directly with the health aspect of individuals in the society. Compliance with guidelines of the law builds confidence among the employees towards the compensation of the organization. Moreover, the employees perform effectively because of the effectiveness of the compensation system (Rosenbloom, 2009). A compensation system that considers the legal requirements regarding provision of benefits and salaries to the employees eradicates natural biases resulting from the recruitment and hiring process. In this context, the compensation system adheres to specific regulations in the law regarding compensation such as minimum wages, insurance and health benefits to the workers. Compliance with the legal requirements is an important factor in the creation of compensation system because it promotes job satisfaction and security among the employees. The factor also prevents future occurrence of conflicts between the organization and the employees. The employees can perform effectively because the compensation system covers all then legal aspects regarding salaries and benefits such as taxation, health insurance and the level of remuneration. The legal requirement regarding compensation varies depending on the type of sector an organization operates in the health field (Melbinger, 2010). Amount of Salaries and Allowances The amount of salaries and benefits provided to the workers varies depending on various factors such as the level of qualification, experience and type of work as well the skills of an individual in the field. The employees salaries in the health sector vary depending on their position, roles and number of hours an individual dedicates to official duties. The amount of benefits and salaries provided to the workers when developing a compensation system in the health sector is imperative for consideration (Abernathy, 2011). The level of performance among workers correlates directly with the amount of benefits and remuneration provided by an organization. Higher levels of salaries and benefits facilitate efficiency among the workers. Furthermore, high amounts of salaries and benefits promote the living standards of the workers in an organization that is essential to enhancing their motivation (Biswas, Biswas&Biswas, 2014). The factor of the level of benefits and salaries is also crucial when establishing a compensation system to attract highly qualified individuals in the nursing field. Higher salaries and benefits in an organization promote performance because it attracts the most qualified individuals in the field. Moreover, the quality and safety of the services provided by the organization improve because of the availability of skilled labor. Performance-based compensation systems focus on enhancing efficiency and performance of the employees through the provision of adequate salaries and benefits. In this case, the organization promotes the quality of their services by recruiting and hiring the best individuals in the field. The current organization can utilize this factor of the amount of remuneration to create its compensation system in order to enhance its community-based health services (Abernathy, 2011). Currently, the organization offers limited benefits to its employees that limit their performance and commitment to their roles. The factor of the amount of benefits and salaries can enhance efficiency, motivation, commitment and performance of employees in a particular organization. An effective compensation system also emphasizes on the benefits rather than salaries. This emphasis is because; individuals who obtain high levels of benefits have a better lifestyle and job satisfaction than their salaried counterparts. In addition, the benefits are not exposed to state deductions such as taxes and loans that promote their reliability in enhancing the welfare of the employees. Employees who receive higher benefits than salaries are also motivated which is an essential aspect of enhancing performance in the healthcare sector (Melbinger, 2010). Skills and Experience of the Employees Skills refer to an individual’s abilities and knowledge of a particular aspect in their field of practice. The level of a persons training in higher education institution is a major element in evaluating the skills of an employee in a specific field. The health field absorbs different types of employees based on their skills and qualifications. Some of the major qualifications of employees in the health field include diploma, bachelor’s degree, masters and Ph.D. in various fields in the sector. Most of the care nurses in the organization have bachelors and masters degree, but their compensation is equivalent to that of diploma holders. An effective compensation system should encompass the level of qualification in order to attract the best individuals in the job market (Teleki, 2009). The benefits and salaries provided in the compensation system should differ based on the skills of an individual in order to enhance motivation and job satisfaction in a particular organization. On the other hand, the experience of an individual refers to their exposure in a particular section in their field of practice. Individual with higher levels of experience provide higher quality services than their inexperienced counterparts in the field. The compensation system should entail the aspect of experience in order to attract highly experienced individuals in the field. The experienced individuals should be remunerated higher than the inexperienced workers in an organization. The element of exposure is crucial in the organization because it promotes performance and the quality of services provided by the workers (Biswas, Biswas&Biswas, 2014). The compensation system should define the salary and benefits of their employees based on the skills, qualifications and experience in the field. Position of the Employee The position of the employee in a particular organization is a major factor in the creation of an effective compensation system. The compensation system should focus on providing employees with benefits and salaries based on their position in the organization. Individuals at the management level should be remunerated effectively in order to facilitate efficiency and performance among the management in a particular organization (Rosenbloom, 2009). References Abernathy, W. (2011).Pay for profit. Atlanta, GA: Performance Management Publications, Inc. Biswas, B. (2013). Compensation and benefits design. Upper Saddle River, N.J.: FT Press. Biswas, B., Biswas, B., &Biswas, B. (2014).Employee benefits design and compensation. Upper Saddle River, NJ: Pearson Education / FTPress Delivers. Melbinger, M. (2010).Executive compensation. Chicago, IL: Wolters Kluwer Law & Business, CCH. Rosenbloom, J. (2009). The handbook of employee benefits. New York: McGraw-Hill. Senger, J. (2010). Designing a nonprofit compensation system. Hoboken, N.J.: John Wiley & Sons. Teleki, S. (2009).Research Colloquium on Workers Compensation Medical Benefit Delivery and Return to Work. Santa Monica, CA: Rand Institute for Civil Justice. Read More