Compensation_Plan

Akinlua Oludolapo Morayo University of Phoenix Week 5 Individual Assignment Career Development PlanIV (Compensation) HRM531 Instructor: Deborah Jones April 30, 2010. Compensation Plan Compensation entails paying employees and enticing him/ her to continue working for your company. It is a critical facet of any manager's job and goes beyond straight salary. It includes benefits, perks, stock options, etc. (John, 2010). In today’s challenging and unpredictable economic market, companies are trying to redefine sales strategies, incentives, and pay compensation. This has become very important because of the way it affects the lifestyle of the employees in a company. To set up a compensation plan, the company will have to update its job descriptions, institute a job evaluation method, conduct pay surveys and develop a pay structure (Cascio, 2004). However, taking the company InterClean as a case study, there are certain criteria that will be focused on in creating a compensation plan for the employees that include: -compensation plan, pay system, total rewards package, and compensation plan benefits to the employees and the company. • Compensation plan for the new employment team: This plan will be classified into three stages. The first stage is building up the knowledge and skills of the employees with motivation in performing well on his/her job and contribute to the organizational performance. The second stage will be based on the employee’s income. It will be in form of short and long term incentives. - For short term incentives: Periodic bonuses (Quarterly) when sales quota is reached. - For long term incentives: Annual bonuses when the company has a profitable year. The third stage will be based on Achievements and Career development awards. This will entail promotions for further career, medical benefits life insurance, annual payments and pension plan. • Pay system: A formal pay system entails rewarding an individual for his/her contributions to the success of the company, while making sure that your organization receives a fair return on its investment in employee pay. (Ryan, 2002). This pay system plan will be reviewed at least annually, and adjustment will be made where necessary. During this annual review, InterClean will consider the kind of employees qualified for the job, the turnover rate, and how the pay system will help achieve the objectives of the company. This pay system will work because of the following reasons: - Recruit - The pay ranges will provide competitive hiring rates for attracting high caliber employees. - Retain - The performance appraisal plan and pay increase feature will encourage performance plus growth and development within the company. - Motivation - The pay plan will make the employees more interested and enthusiastic about their present assignments and provide incentive to seek greater opportunity within the company. Having capable employees who are interested and enthusiastic will help win the battle for business survival and growth. • Three components of total rewards package a) Work-Life Balance Component: This component provides the employees with tremendous flexibility, enabling him/her to work effectively, and at indirect costs to the organization. It includes: Flexible scheduling, Telecommuting, Job sharing, Child-care and elder care, Fitness center, Tuition reimbursement, and Sabbaticals. b) Benefits Component: Benefits are the second component of the total rewards package. Over 80 percent of companies include employee benefits as a part of their total rewards package to attract, retain and motivate key talent. Benefits now constitute approximately 40.7 percent of wages and salaries based on U.S. Chamber of Commerce, Employee Benefits. (Cahaba, 2010). The following benefits provided to employees are: Medical benefits, Dental plan, Paid time off, Holidays, Short-term disability, Long-term disability, Social Security, Travel Accident Insurance, Retirement plans. c) Training, Career and Personal Growth Component : This will focus on training and development. As organizations struggle to ensure that they have the right number of people with the right skills in their organizations, they must continuously re- evaluate career growth and Training and Development (T&D) programs. At InterClean, the company will create opportunities for employees to learn and grow in order to develop requisite skills needed to survive and thrive in today’s competitive environment. It will also add value to the organization’s overall success. All career growth and development plans will be integrated into the organization’s performance evaluation process to ensure appropriate alignment with the organization’s strategic goals. • Compensation plan benefits to employees and the company: The compensation plan benefits are classified as: worker’s compensation, disability insurance program (short and long-term), medical and dental coverage, sick leave, retirement plan (401K), unemployment insurances and social security. These benefit costs will be contributory, whereby the employees pay a small percentage of the cost with the company absorbing the bulk of the expense. One of the key benefits is the 401K plan. The company will contribute dollar for dollar up to 6% of the employee’s contribution, while the employees have options to contribute up to 10% total per pay period. A reputable financial firm will manage the 401K plan and the employees will have the ability to diversify his/her funds based on the risk tolerance. Depending on age and personal goals, the employees have the opportunity to influence how his/her money grows. Also, the sales representatives will receive an increase in the percent of commission received as targets for new sales of the company. Award ceremony will take place to recognize the outstanding performers and monetary rewards, such as gift cards, flat screen television, $1000 check, will be provided annually. The compensation plan is very comprehensive. InterClean’s goal is to provide for the employees that are very dedicated and motivated to reach the peak of his/her performance. This compensation plan will enable the employees manage the retirement plan according to his/her personal preferences, and benefits that includes; salary, commission and incentives necessary for each employees well being needs. References Cascio, W. F. (2004). Indirect compensation: employee benefit plans. In Managing human resources: Productivity, quality of work life, profits (pp. 462-503). New York: McGraw-Hill Companies. John, F. R. (2010). Compensation Planning for your Employees. The New York Times Company. Retrieved April 30, 2010, from http//www. About.com Ryan, A. (2002) Setting up pay system. Zero to one million. Retrieved April 30, 2010, from http//www.Zeromillion.com