Total Employee Compensation - Essay Example

The paper “Why Is Total Compensation Approach Beneficial to Both Employers and Employees?" is a convincing example of a term paper on human resources. Employee motivation is essential to the achievement of an organization’s objectives, and all human resource managers must ensure that its workforce is fully satisfied. Employees can be motivated by both cash and non-cash approaches as long as the goal of motivation is achieved. In the contemporary business society, it is very common to find that thirty percent of the compensatory package of most employers comes in the form of non-cash benefits.

On that note, it is thus crucial to teach the organization’s staff on the importance of benefits, and this can be achieved through the issuance of benefits statements. The non-cash benefits help employees to save their income in some way, and this is addressed in the benefits statement (Cotton et al., 2000). For instance, if an organization wants to raise some capital and it issues its share capital and in the process, employees are given share options they will have acquired some stake in the company with no consideration hence saving money which they could have used to buy the shares.

If an employee doesn’t value the benefits provided to them by the company they can easily switch to another company due to the greed of earning one extra dollar yet the compensation benefits in their current company is worth three dollars.Welfare and health benefits are a major concern of most employees and if catered for total compensation will be achieved. This can be achieved using two approaches namely the defined contribution and defined benefits methods (Duhigg, 2012). Defined benefits funding is where an organization offers core health and welfare benefits to its employees such as dental coverage, medical and group life.

Under this approach, the company caters for all or part of the expenses and not all the employees receive equal packages but it depends on the needs level. For instance, an employee who needs coverage for his family will get the benefit that is higher than one who needs employee-only benefit and in the process, they end up getting different compensation packages. Employees can also use the number of their benefits to reduce their tax liability. This is a very good approach to ensuring that total employee compensation is achieved.

Defined funding approach is where employees are given a list of benefits which the organization can provide, and they are expected to choose them but under a fixed budget. Employees end up choosing different benefits that are important to them but have the same cost (Griffin et al., 1991). For instance, the human resource manager can inform the employees that they are providing benefits to them worth a thousand dollars, and they are required to choose their different benefits until this limit is reached.

It is a flexible approach, and employees are fully compensated since all their needs are catered for. Employees can also use the amount of the benefit to reduce their tax liability hence increasing their net income. Total employee compensation creates equality among all the employees in the organization since they are accessing equal benefits. I am proposing that our organization should implement these two approaches of total employee compensation so that our goals and objectives can be realized in the long run.

Total employee compensation will have many advantages for our organization. First, there will be a clear communication track in our organization, and this will enable employees to realize that they are highly valued by the company. This is because it is easy to communicate with workers using this method since their compensation is stated in financial figures regardless of whether they are cash or non-cash benefits. Total employee compensation also increases employee motivation and retention in the organization.

This is because they are treated equally regardless of their job position, and they also receive an equal package of benefits. Our company will be able to budget for the employee benefits plan effectively since the actual price is known in advance. There will be an increased certainty in staffing since the cost of hiring new employees is known in advance. The remuneration of an employee does not depend on his benefits needs and the status of his family, but it’s rather a fixed amount offering a variety of benefits to be chosen.

This plan also considers married couples serving one organization. In most cases, these parties are usually faced with an overlap of benefits but with the proposed total compensation approach they will be able to choose different benefits available to them.Total compensation approach is beneficial to both employers and employees. An increase in the wage of an employee is a motivating factor to them, and total compensation is a good approach since most of the benefits are valued in dollars hence increasing their wage level.

Employees have a wide range of benefits to choosing while employers can easily account for the compensation. Top performing employees will be attracted to our organization if we implement this approach, and costs will be cut down due to their high level of efficiency.