Employee Benefits - Assignment Example

Name Course Lecturer Date Question 1 Employee benefits are becoming increasingly important in the world of business today. (Markel, p. 23) states that they have significant administrative and financial impact towards an organization. Employees are now demanding for extra incentives in their respective jobs as the competition in the labor market intensifies. Employee benefits refer to any form of compensation given to employees other than the usual hourly remuneration. Employee benefits can be categorized as short-term and post-employment benefits. Short-term employee benefits refer to benefits that are entitled to an employee not more than twelve months of service they rendered. Post-employment benefits on the other hand are offered to an employee after completion of his/her employment term. Additionally, employee benefits can be categorized as legally required and discretionary benefits. Legally required benefits are those imposed and mandated by the law such as the Workers’ compensation insurance program. Discretionary benefits on the contrary are benefits that a company chooses to offer to its employees. Discretionary benefits are used synonymously with flexible benefits as they can be altered by the company depending on prevailing circumstances or in response to employee demands. Flexible benefits enable employees to choose from a variety of benefits that suit their desires and preferences. Flexible benefits can be used to encourage diversity. Companies that have grown out of acquisitions and have wide geographical spread of corporate locations require flexible employee benefit programs to cater for the diverse workforce. The program should be able to accommodate employees moving from one country to another for purposes of career development. In addition to offering a range of benefits that can be tailored to meet the need of the entire workforce, this kind of rewards strategy may be seen to reinforce multinational and corporate brands. Offering flexible benefits combined with correct recruitment and retention initiatives ensures adequate engagement of employees (Rosenbloom, p.297). Flexible benefits are also fundamental in ensuring equality in the workplace. With increasing diversity of workforces in terms of generations, there is need for flexible benefits as the needs between these generations vary considerably. The different generations such as the X and Y generations view benefits related to work-life balance, money and health differently. For instance, a young employee may want to spend more on a company car benefit than a pension. On the contrary, an older employee will be more interested in making contribution to their healthcare provisions and retirement pensions. With an ageing workforce, it is important to adapt a benefit program in which the workforce is able to ‘flex’ the benefits packages according to the seasonality of their lives. Rewards that are aligned to an individual’s personal needs serve as a motivation and they enable them to acquire a direct interest in enhancing organizational success. Job satisfaction is also an end result of flexible benefits and this is directly linked to employee retention. Employee benefit strategies are essential in keeping an organization highly competitive. First and foremost, it is important for the HR professional to constantly monitor legislations that affect employee benefits and assess their potential impacts. This is to ensure that the organization’s employee benefit program is in line with federal, state and local laws. For instance, healthcare reform laws will affect the way an organization administers its healthcare benefits. Some of these legislations are quite complex and its successful implementation in an organization depends on the competence and expertise of the HRM. Assessing and evaluating a benefit program is yet another strategy that can ensure sustainability the program. (Beam, p. 498) asserts that the evaluation should not only be done to determine compliance with government requirements or to monitor costs but rather to monitor its competitiveness in the marketplace. A good employee benefit program is one that is able to attract and retain employees as well as respond to the increasing demand s of employees. Employee surveys, benefits needs assessment and benchmarking data are some of the platforms that can be utilized by organizations to endure that their employee benefit programs are tailored to meet employee needs and remain competitive. Communication is paramount. Notably, many employees across organizations are not are of benefits available to them. For this reason therefore, HR professionals should ensure that employees are well aware of the options available to them as well as the value of their financial and non-financial benefits. Examples of communication benefits that can be used to pass this information include social networking tools, employee meetings, benefits workshops and compensation statements. Flexible benefit programs are also highly recommended as opposed to one-size-fit-all programs in order to support workplaces that reflect diversity of generations, cultures and professionals. Question 2 There are a number of factors that affect the pay levels within an organization. Geographical location of a premise affects the remuneration strategy to be applied. For regions where the cost of living is high, the company will automatically have to pay higher wages to its employees. For instance, a job paid for $40,000 in Texarkana will have to be paid for $87,885 in Honolulu in order to maintain the same kind of living. The compensation philosophies across different organizations also determine the nature of pay levels. Some companies have the philosophy of paying higher wages relative to others in the industry for purposes of attracting and retaining skilled workers. The profitability of an organization also affects the way it pays it employees. Organizations that are more profitable tend to pay their employees higher rewards than the less profitable enterprises. Employee tenure and performance is also another platform used by organizations to determine their remuneration policies. Traditionally, employee salary was systematically increased after years of service. However, with increasing global economy demands, other sophisticated considerations such as employee contribution to the overall performance of the organization are being used to determine salary packages. Webster (56) defines motivation as the incentive or stimulus that drives people to accomplish organizational or personal goals. Researchers agree that the major challenge for organizations is to determine factors that motivate their employees and thus influence their job satisfaction. The motivation-hygiene theory also known as the two-factor theory highlights two types of needs that lead job satisfaction: motivators and hygiene factors. Hygiene factors include salary, benefits, working conditions and job security. These factors can lead to dissatisfaction if they are not properly managed but they do not lead to positive feeling towards work. Motivators on the other hand include recognition, achievement and individual growth and they are known to produce positive feelings of job satisfaction. To ensure optimal job satisfaction, employers need to fully understand the motivational needs of their employees. These are needs and expectations that influence their performance and behavior at work. Factors that motivate employees can be divided into social and psychological or into intrinsic and extrinsic factors. Extrinsic factors are tangible rewards such as working conditions, work environment, promotions, security, fringe benefits and salary. Employees become motivated when working in safe environment and when obtaining the highest possible wages. Performance becomes limited when employees are working under psychological fatigue probably due to poor working conditions. Intrinsic factors include work-life balance, flexible working hours, opportunities for career advancement and the feeling of identification. This enables the employee to develop a psychological contact with the company and adds his value towards its success. Other than the mainstream pay systems, HRM’s across organizations are developing comprehensive reward systems that incorporate other incentives that will motivate workers. There are three critical elements of an effective reward system; core principles of the organization, process and structural features and the actual reward system practices. Core principles of the organization include values and beliefs that the organization holds regarding payment such as belief in secrecy about pay and the belief in pay for performance. Structural and process features include factors such as communication channels, decision making processes and organizational structure. They are fundamental considerations when designing a rewards system as they determine the extent to which the system will be accepted and understood by all the members of the organization. The actual rewards system should include administrative policies and delivery systems such as profit sharing plans and gain sharing plans. According to the reinforcement theory, the rewards system should ensure positive reinforcement; that is, it should motivate employees to work extra hard due to the value they get from the system. Employee engagement is the level of employee-organization alignment. It describes the extent to which the organization involves its employees in the day-to-day running of the business. Engaged employees connect emphatically with others and they become physically involved in their activities. This is displayed in the way they express their creativity, feelings, values and beliefs as well as their personal connection with their work. Additionally, engaged employees harness their devotion and commitment into the job and they are ready to dedicate long hours in it. Communicating organizational successes with employees help them to see the fruits of their work and also enable them to understand ways in which they can support the overall performance of the organization (Vance, p.708). Works Cited; Beam, Burton and McFadden, John. Employee benefits. Chicago: Real estate education, 2001. Markel, Karen. Discretionary employee benefits. Alexandria: Society for human resource management, 2010. Rosenbloom, Jerry. The handbook of employee benefits: Design, finding and administration. New York: McGraw-Hill, 2001. Vance, Robert. Employee engagement and commitment. Alexandria: SHRM foundation, 2006. Motivation. In Merriam-Webster’s online dictionary. Retrieved July 20, 2012, from http://www.merriam-webster.com/dictionary/motivation. Read More