Compensation_Plan

Compensation Plan for Employment Team Anastasia Rusakov University of Phoenix HRM 531 Tiffany Mytty-Klein February 14th, 2011 Compensation Plan for Employment Team Successful employers that want to stay competitive in this environment must develop stable compensation plan that motivates employees and ensures equity. Compensation is the combination of monetary and other benefits. There are two types of compensation management: direct and indirect (Cascio, 2005). Direct compensation is given at a regular interval at a definite time and includes basic salary, travel allowance, bonus, and medical reimbursements (Cascio, 2005). Indirect compensations comprised of other non cash benefits, such as an office car provided to the employee, pension contributions, health insurance, in other words it is designed to improve employee’s quality of life, promote loyalty, and reward long term employment. In this report we will analyze and describe a new direct compensation plan, why the designed pay system will work, define three components of a total rewards package that would motivate employees to reach peak performance, and finally describe compensation plan’s benefits to the individual as well as to the company. IncterClean will offer a dynamic compensation plan with five ways to increase their income. Top retail bonus will be offered to the employees who achieve high retail sales over a four-week period. Bulk order bonus will be available to the individual who can sell at least five customized packages and solutions in one order. First order bonus is a reward that will be provided for the initial effort. During the first month of your employment you will receive an additional 5% of your sales. Team bonus will be 3% of your base salary and will be distributed to every individual when specified goals are met or exceeded by the team. In addition every employee will be eligible for leadership bonus. An individual will be paid the first bonus the month the new level of leadership is earned and the second after six consecutive months of holding the same title without going into grace (O’Donnell, 1994). The base salary will be determined based upon years of experience, education, the value of the position, performance reviews, and professional associations and certifications (O’Donnell, 1994). When deciding the value of the position we will adjust the market data and do additional data research on practices for comparable jobs at comparable companies. The described pay system will work because it is fair and motivating. It provides many different opportunities to employees. The plan is easy to understand and it sets reasonable expectations. We believe that long-standing principles of providing appropriate recognition, incentive for excellence in performance, and equal pay for work of equal value, creates a pay system that is suitable for every individual (Steven, 1996). Outstanding performers will receive highest rewards which will motivate them to continue high performance. Average performers will receive significantly smaller raises, which will motivate them to work harder and get larger rewards in the future. Poor performers will receive no increase and no rewards, which is intended to encourage them to improve their performance or leave (“Leadership Bonus Program”, 2011). In addition to basic health benefits, associates can choose to take advantages of the following programs: nurse hotline, Lasik vision correction surgery discount, exercise and fitness club reimbursement. Creating healthy work environment makes for happier, more productive employees (Weedie, 2007). In order to reach pick performance it is also important for employees to have good work/life balance and have time to relax. The employees will receive vacation days (starting out with 2 weeks) that can be combined with paid illness days (5 days), and personal days (3 days). Time off will also include holidays and medical appointment time. When employees are rested they are more efficient and become more self-driven to perform their job tasks at level that meets or exceeds set expectations (Steven, 1996). Continuous education through programs provided by company or tuition reimbursement will motivate employees to achieve more. Accreditation and licensing programs will improve individual’s attitude toward the company, while bolstering self-confidence. Most definitely the compensation plan will benefit the individual as well as the company. For all the alternative motivators, money will always occupy a rightful place (Steven, 1996). It gives an employee incentive to perform quality service, produce a quality product, and improve internal processing within the company. What benefits the employee directly benefits the company. The rewards are given to employees to develop and generate process-improving ideas, to increase productivity and reduce absenteeism (Steven, 1996). The rewards make employee feel valued and satisfied, increasing company’s overall moral. Even if employee is working in a good environment but the pay is too low and they can’t pay their bills, the need for money will outweigh the worker’s happiness. Satisfied employees are less stressed and have more energy. Companies that spend money of their employees know that a worker will give them back their money back with good work and loyalty. REFERENCES (2011). Leadership Bonus Programs. Retrieved from:// http://www.imakenews.com/gcdemonstrator/e_article001984523 Casio, W.F. (2005). Managing Human Resources: Productivity, Quality of Work Life, Profits(7th ed.). New York, NY: McGraw-Hill Kerr, Steven. (1996). Ultimate Rewards: What Really Motivates People to Achieve. 6th ed. New York: McGraw-Hill, 1996. O’Donnell, Michael. (1998). “Creating a performance culture' Performance-based pay in the Australian public service.” Australian Journal of Public Administration, 57(3), 28–40. Weede, T. (2007). Help Employees to Stay Fit and Healthy. Retrieved from:// http://www.entrepreneur.com/wellness/article173684.html