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The following is a summary of the main points discussed in this document.
The report examines three compensation systems that our company can develop and implement for current and future employees. Compensation is crucial for meeting essential needs such as housing, family expenses, vacations, education, and retirement preparations. The way we administer compensation has a significant impact on employee caliber and retention. This report aims to provide insights into diverse compensation strategies that can attract top talent, enhance employee productivity, and retain valuable staff members.
By incorporating annual merit increases, we can remain competitive in the workforce. Research indicates that employees prefer employers who offer competitive salaries. Adopting an annual merit increase system will motivate employees to continuously improve their productivity and achieve business objectives in order to receive higher compensation. While some may view merit increases as entitlements, implementing this system will prevent a decline in productivity. By aligning business goals with merit increases, our company can boost productivity across all departments.
Effective management communication is crucial for setting expectations and achieving production goals.
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It is important for management to communicate the potential merit increase the employee can receive by meeting these goals. Additionally, healthcare benefits play a significant role in attracting and retaining employees. Providing healthcare benefits shows that the employer cares about their employees and helps them return to work quickly, increasing productivity. Moreover, healthcare benefits are not just a perk but also a part of the employee's compensation package. As part of effective communication and training, management should annually review the employees' Comprehensive Compensation Package to ensure they understand the total monetary value provided by the employer.
Lastly, 401(k) plans are becoming increasingly popular among employers, offering additional compensation options for employees.
Research shows that not offering a 401(k) plan can result in higher turnover rates and increased training costs. Therefore, it is crucial for us to recruit and retain top employees. To achieve this goal, I suggest implementing an annual merit system, providing healthcare benefits, and establishing a 401(k) plan. In order to ensure the effectiveness of our compensation packages, we will generate compensation statements for all employees and offer training to managers with direct reports so they can effectively communicate our message. Additionally, we will set early-year goals and expectations to establish a strong foundation for performance. Our compensation plan aims to attract talented individuals, increase employee engagement, motivate high-performing managers, retain them to enhance our company's profitability, and ultimately create value for our shareholders.
Introduction
Compensation is a crucial aspect of our company as it plays a significant role in our employees' financial security. Their ability to cover essential expenses, such as rent or mortgage, family expenses, vacations, education, and retirement, relies on their compensation.
The way we compensate our employees not only affects their loyalty and dedication to the company but also influences the caliber of talent we attract and retain. This report aims to provide valuable insights into different compensation strategies that can effectively attract and recruit highly skilled individuals while enhancing employee productivity and ensuring the retention of our most valued employees.
In addition, as sales volume targets increase, technology and innovation rapidly evolve, and customer expectations for superior service quality rise, employers must develop innovative approaches to outperform competitors. Ultimately, surpassing our competition depends on the people who make up our workforce.
Improved compensation packages, such as Annual Merit Increases, Healthcare Benefits, and 401k plans, are an effective way to attract employees. This research aims to demonstrate how providing these benefits positively impacts the company by attracting high-quality employees, retaining highly productive employees, and increasing motivation and productivity among all other employees. By implementing these measures, our company will show its commitment to being the preferred employer and emphasize the value our employees hold for the company.
Research Findings
Merit Pay Increase
According to Towers Perrin's Global workforce study, the most important factor that attracts UK workers to an employer is competitive base pay. Almost six-out-of-ten (59%) respondents stated that this would influence their decision ("Competitive base pay," 2007, p.16). Retaining high performing employees and keeping them motivated is crucial for increasing and maintaining productivity in order to compete in the marketplace. One effective method for retaining and motivating employees is through annual merit increases. If a merit pay system is successful, it can drive employees to work harder and achieve more (Mack, 2014). The key to the success of the merit pay system lies in its alignment with the organization's business strategy, rather than being perceived as an entitlement. Merit increases can serve as a source of motivation for employees to achieve various company goals, such as timely project completion with high quality or implementing new operational procedures (Heneman, 2002, p.382). Lack of a clear link between merit pay and business goal accomplishment often leads employees to overlook its significance.
The understanding of how individual goals align with organizational priorities and how merit increases are earned based on exceeding given goals is crucial in a Supervisory role. Planning and Goal Setting form the basis for executing our strategies and managing performance. It aims to ensure that employees comprehend the annual organizational priorities and have defined individual goals that align with their job role and those priorities. Effective communication and equipping managers with the necessary tools for administering rewards are also vital (Leritz Ph.D., 2012, p.1).
Analysis: Research indicates that employees desire to be employed by companies that offer competitive salaries. To address this, our company intends to transition to an annual merit increase system. This adjustment will motivate employees to enhance their productivity and achieve business objectives, resulting in higher compensation. Currently, employees view merit increases as something they are entitled to, which may cause their productivity levels to stagnate. By linking business goals to merit increases, our company can boost overall productivity. However, effective communication from management will be crucial in setting clear expectations for goal attainment and informing employees about the potential merit increase they can earn by meeting these goals.
Healthcare Benefits
According to a study by "Competitive base pay most important for recruitment" (2007), not addressing health and wellbeing in the workplace could cause almost two thirds (59%) of employees to consider leaving their job. The Business in the Community's Business action on health campaign reveals that 83% of staff consider how their employer takes care of their health and wellbeing when choosing a job (p.16). Effective communication about compensation plans heavily influences the turnover rate of high-performing employees. Just because one company offers better benefits does not guarantee employee retention. Surveys have shown that companies with better communication strategies and fewer benefits had a turnover rate of only 12%, compared to 17% for companies with better benefits. Companies that provide excellent benefits and effective communication had as low as an 8% turnover rate among their top-performing employees. Additionally, when employees were asked about their satisfaction with benefits, only 22% expressed satisfaction with superior benefits from employers who had poor communications. Conversely, 76% of employees with lesser benefits but effective communication from employers were satisfied with their benefits ("Better benefits communications," 2005, p.9).
Companies must demonstrate to their employees that healthcare benefits are included in their overall compensation. Failure to effectively communicate the significance of these benefits often leads to higher turnover rates among top performers. Kathryn Yates, global director of communication consulting at Watson Wyatt, emphasizes that employers invest a considerable amount of money in benefits. However, if employees are unaware of the cost or do not appreciate the value of these benefits, the company will not see any return on its investment (Better benefits communications, 2005, p.9).
Analysis: Research has indicated that healthcare benefits are essential for keeping employees and boosting productivity. When employers provide healthcare benefits, it shows that they care about their employees' health and helps them recover quicker and work more effectively. Additionally, healthcare benefits are not only an additional perk but also a component of the overall compensation package for employees. To ensure that staff members have complete knowledge about their Comprehensive Compensation Package, management should organize annual training and communication sessions. These sessions should focus specifically on healthcare benefits to effectively engage and retain high-performing employees.
401(k) Plan
The matching contribution for 401(k) plans offered by employers has increased from 68 percent to 73 percent in recent years (Plenda, 2013, p.31). According to a recent survey, if another employer provided a similar job with a 401(k) plan, 40 percent of employees said they would pursue opportunities with the new employer. Additionally, it was found that when a 401(k) plan is presented, most employees work harder and stay in their jobs for longer durations (Lamont, 2014, p.10). Employees who save money tend to be good workers as they prioritize future outcomes. Such employees are more diligent in their work and take better care of employer assets due to the understanding that their actions can impact their reputation. Moreover, not only do employees stay in their jobs longer, but companies can also use 401(k) plans to attract more conscientious and productive workers (Munnell & Sunden, 2004 pp. 3-20).
Research conducted by Bank of America Merrill Lynch reveals that failing to provide a competitive benefits package to employees can lead to higher turnover rates, increased training expenses, and decreased productivity and sales. It is crucial for employers to view benefits as a substantial investment. By investing in benefits, employers can attract highly skilled individuals and showcase their dedication to the professional development and financial security of their workforce. This strategy will grant them a competitive advantage over other employers (Brooks, 2012).
Research indicates that the rise in employers providing 401(k) plans is crucial as companies lacking this benefit may experience employee attrition, decreased productivity, and a decline in sales compared to rivals. To secure a competitive edge and appeal to exceptional professionals, it is essential for us to implement our own 401(k) plan.
These are the recommendations:
Our company's compensation plan is designed to attract and retain valuable employees who will contribute to our profitability and generate value for our shareholders. To accomplish this, we propose implementing merit increases, healthcare plans, and 401(k) plans for our employees. These measures align with our organization's priorities and allow us to offer exceptional compensation packages.
The recommendation is to establish annual goals and expectations for employees, ensuring they understand the organization's priorities. It is crucial that their individual employee goals align with their job role and those priorities. Managers will hold meetings with their respective employees to communicate these goals and expectations, which the employees will sign off on to indicate understanding.
Each year on February 15th, managers will meet with each employee to discuss results, provide feedback on accomplishments and areas for improvement, and announce the merit increase that will be reflected in their March 1st paycheck. By implementing a merit increase, we aim to boost employee engagement, motivate high-performing individuals, and ultimately drive profitability while delivering value to our shareholders.
For health care benefits, it is recommended to select United Health Care and contribute $500 per month towards the employee's expenses. Additionally, a Comprehensive Compensation Package should be implemented. This package will be assessed by the manager during the annual merit increase to showcase the company's generous compensation offerings. The Comprehensive Compensation Package will consist of a customized summary of the employee's compensation, including the monetary value of their benefits. Through effective communication with employees, we can anticipate enhanced retention and satisfaction rates, resulting in decreased company expenses and heightened profitability.
Setting up Fidelity as the preferred option for managing employee's 401(k) accounts is highly recommended. Fidelity provides a matching contribution of 3% on employee contributions and conducts yearly financial seminars to guide retirement planning. Additionally, during annual performance evaluations, managers present the Comprehensive Compensation Package, which includes an overview of all aspects of employee compensation and the monetary value of company matching. By offering a comprehensive 401(k) plan along with financial guidance, we can successfully attract and retain talented individuals.
The conclusion is as follows:
This study aims to show how offering annual merit increases, healthcare benefits, and 401k plans can have a positive impact on the company. These compensation benefits are important for attracting high-quality employees, retaining highly productive employees, and increasing motivation and production among all employees. The implementation of annual merit increases encourages employees to be more productive and strive for the highest increase possible to enhance their salary. Aligning these merit increases with the company's business objectives can improve overall productivity. Providing healthcare coverage is essential for employee retention and communicating its value effectively is crucial. Employees with healthcare coverage are more likely to quickly visit doctors and return to work, resulting in less downtime and increased production.
In conclusion, the implementation of a 401(k) plan among employees has a lasting impact, fostering loyalty and commitment towards the success of the company. The study highlights the significance of compensation to employees and the role it plays in attracting and retaining talent. Moreover, it reveals that employees are more motivated and thus contribute to the profitability of the company. Effective planning, goal setting, and communication are crucial in ensuring that employees understand the value of benefits, thereby reducing the likelihood of them leaving. The research also demonstrates a growing trend among businesses to offer 401(k) plans as a means of attracting dedicated workers. It underscores the importance of benefits in both retaining current employees and attracting new ones. Furthermore, it emphasizes the heightened productivity and longer retention periods associated with offering these benefits. Ultimately, emphasizing the value of benefits as a part of overall compensation is essential in retaining top performers.
Effective communication is essential for gaining employee buy-in and positive responses when implementing compensation benefits. The success of merit increase, healthcare, and 401(k) plans largely depends on employees' understanding and acceptance, as well as their positive perceptions of the plans. Additionally, it is crucial to remain aware of the benefits offered by other organizations and ensure that we stay competitive. However, it is equally important to remember that employees must comprehend the advantages and fully support them in order for them to be successful.
References
Better benefits communications can have a positive impact on employee retention (Managing Benefits Plans, 2005). According to Brooks (2012), offering attractive monetary benefits is becoming more important in attracting workers (BusinessNewsDaily).
Enhancing Compensation Strategies for Employee Retention. (2016, Mar 18). Retrieved from https://studymoose.com/compensation-strategies-essay
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