Improved Rewards at Work: Compensation and Benefits Packages
Improved Rewards at Work: Compensation and Benefits Packages
Compensation and benefits packages are the talk of the century. Whether it is benefits offered by the government, an insurance company, the local supermarket, a fortune 500 company, a logistic firm, retail, or even being the owner of a business, this topic is wide spread. Employees want to know what they will get in exchange for their working for a company. The cost of dental, vision, and health benefits are increasing higher than ever before and having a great benefits package will surely have employees or future applicants beating the path down to work for an organization that has offers competitive benefits.
These are the benefits that most organizations offer and are pretty standard. However, if organization include in their compensation package 401 K, retirement insurance, disability insurance, and life insurance, it makes the organization more attractive. Oftentimes, most employees don’t have a life insurance policy and their loved ones are stuck trying to come up with the money to give the deceased a decent burial. This can be a less stressful task if the person is covered by a life insurance policy. Organizations who offer this plan to their employees are definitely a benefit.
The rate is usually cheaper as a group company rate, than it is to purchase it privately. Another benefit that comes in handy for employees is a retirement plan. Although this is often not enough money for seniors to retire and have to end up going back to work part-time just to continue the lifestyle they are accustomed to, it gives them some sort of cushion. It’s even better if they pay more into it to better plan for the future. If the plan also includes a 401 K package, then the employee gets a better cushion for retirement.
Since insurance is needed in this age, it is more likely than not, that employee’s who are pursuing new work ventures and opportunities with a better organization; they are looking for these types of benefits. For example, McDonald’s offers their employees competitive wages, free uniforms, free discounted meals, flexible work hours, medical insurance, prescription drug coverage, 24-hour nurse line access, vision discount, short-term disability, term-life insurance, 401(K), paid holidays, vacation and educational assistance (McDonald’s, 2013).
Having said this, college students who start out working at McDonalds may go on to pursue careers with McDonald’s because they offer an excellent compensation package, especially since they offer educational assistance/tuition reimbursements/scholarships. For someone who has the education and experience in a field such as Logistics or Human Resources, the benefits may be slightly different, because it is a larger organization in a different field. With McDonald’s, the vacation, sick pay and personal days may be more structured, whereas with the government, the days may increase with the hours worked.
With that said, businesses are getting more creative with the compensation packages they offer to remain competitive and retain employees. To determine the ways innovations in employee benefits can improve the overall competitive compensation strategy of the organization we must look at what employees really want. Some suggestions would be: (1) Allow employees to have flexible work schedules. This will allow them to have personal time with the family, attend schools functions or field trips, meet scheduled dr.
’s appointments, or even relax and recuperate so that the employee can come with a fresh renewed mind. The next suggestion is (2) Give out achievement (such as employee of the month with parking privileges or gift card), appreciation of service awards, or letters of appreciation from an immediate supervisor/manager. This type of reward lets employees know they are appreciated for the hard work they have accomplished for the company; they are being noticed and acknowledged by the top of the chain and sends a message to the employee that they are being watched, so keep of the good work.
It could also let the employee know that in the event of promotion or if raises go out, they may be a good candidate for receiving it. By the same token, if they are slacking in any way, they may be coached or forfeit being considered for a raise or promotion. An example is that our company writes love notes to the student (which is a form of appreciation letter). They basically address them for doing a good deed for someone, excelling in their classes/grades, moving on to the next level/phase of their education, or how well they performed a service on a guest.
Our managers and the owner write love notes to us and sometimes reward us with gift cards, movie tickets, bracelets, and necklaces or some sort of prize. Often we do receive raises according to our performance reviews, but sometimes if we meet service and take home goals, get raises. Another thing that is incorporated is student and employee of the month. These rewards often come with free passes to events and front row parking. Aside from that, another innovative benefit is (3) Make the work environment exciting and fun.
No one likes to come to work in a stuffy environment where everyone is on edge and way pass serious about everything. Creating a fun environment sets the tone for success, drives employees to not want to miss a day of work because they enjoy going, is an incentive for staying with the company and remaining loyal, makes employees feel they are part of a family away from family and motivates them to perform better. It is somewhat double fold, because it is also a winning situation for the employer as it makes the work day more productive when employees perform at their peak.
Employees meet or exceed service or product goals when they are happy with their employer. Next, (4) Allow employees to work from home if it is feasible. Sometimes when there is no one to interrupt when projects or deadlines have to be met, being in the comfort of your home environment allows the quiet time needed to gather the information for the plan that needs to be implemented, cuts down commuting time that could be spent on working, offers a change of scenery so creativeness is allowed to flow and best of all, there is no need for dressing the part, it can be done in comfortable clothing.
Last but not least, (5) Allowing employees to be a part of a team or project where they can implement ideas and suggestions on how to accomplish the project effectively and efficiently. Employees feel like what they think is important and their opinions count and are valuable to their employer. It gives them a sense of responsibility, accountability, and belonging. Most of the time, employees acquire the confidence to eventually want to step out and lead projects (Tynan, 2013). Such as with innovative benefits improving an overall competitive compensation strategy, the same applies with tying benefits to those specific jobs.
Performance appraisals are normally tied to raises and wage compensation. The scenario usually goes something like this: The employee has an evaluation on the job performance they have carried out during the evaluation period. The manager conducting the assessment usually has a check list with the duties and rates each section with excellent, good, needs improvement, or poor. The raise is usually based on how well the employee scored (in other words, if they will be rewarded the maximum allowance, receive a portion or nothing at all). The same goes for tying innovative benefits to specific jobs.
For example, if an employee receives a recognition award for high performance and meeting company goals (such as employee of the month), the benefit will be attached to that specific job. Another example is salary and wages. Salary and wages are connected to specific job duties. If a receptionist has duties that include filing, setting appointments, greeting guest, answering phones/taking and dispersing messages, booking meeting, making travel arrangements for managers, and running errands, when evaluation time comes, the amount of wages or salary is dependant on how well the employee performed their duties.
This is also in line with pay for performance. When it comes to a rewards system, there are some things that have to be fulfilled in order for the system to work. Some of the criteria are to ensure employees understand what their job duties include. If employees don’t know what they are suppose to be doing then they will not be able to perform their jobs according to how managers expect them to. Another thing is there must be value placed on this system. If everyone can receive a raise/pay increase or incentive whether or not they are a high performer or a poor performer then there really is no since in incorporating this award.
It will not be fair to the outstand performers. It will send a message that it doesn’t matter how well you do, you will still be rewarded. For the ones who strive to do their best, it lowers their morale and causes them to not want to perform their best. This will also cause a decrese in productivity. Once the high performers stop meeting goals, the organization suffers. An assessment must be conducted on a regular basis and evaluations must include feed back so the employee knows if and where they are lacking and excelling.
There should also be team meetings if feasible or an individual meeting to ensure the employee(s) are on track with what needs to be accomplished in order to make company goals happen. The effectiveness of an equity-based rewards program as apposed to a more creative one is that first, an equity-based rewards program may include stock options in the company. It is also and incentive for being able to retain employees and may contirbute to the success of the company. When employees have stock in a company they anticipate on it doing well in the future so they can cash it in or receive dividends on it when they are paid out.
It also doesn’t hurt if the employee feels like they are an important part of the organization. This may also play a role in employees sticking around. Stock may also be an incentive to employees so they know how valuable of an employee they are. Not all companies offer stock to their employees, so it is a big deal if an organization trusts its employees to participate in owning a portion of the company. Employers have a hard task of making sure their employees motives for wanting to own stock is in the right place.
The reason for this is, say for instance the employee wants to see how much the stock is worth in 5 years. For one, this sends a red flag that they only wanted to invest to see if they could get lucky quickly, in hopes of leaving the company or even earning quick cash. Another motive for the organization to give employees stock in the company is to get employees to commit to the company for the long term. The organization can also look forward to the employee feeling like they are part owner of the company and will therefore give their all to see that the organization is successful.
The employees who have stock will also advocate for the company, ensure they are looking for like employees (high potential), and make sure everyone is on the same page with organizational goals. On the other hand, managers should be aware that this could completely go the other way and the employee can feel as if they should be able to make suggestion and have them implement them, allows them some sort of power to make decisions and afford them the opportunity to make do what they want. Stock can definitely be a motivator if employees commit for the long haul, show an interest in the organization and perform their best (Robbins, 2004).
As for the more creative approaches, they offer a wider variety of options such as child care benefits/discounts, retirement benefits, elder care benefits and educational assistance to name a few. The difference is that the creative approaches include benefits that are very useful to employees. Having stock in a company is a great motivator, however, it is even more motivating being able to receive benefits that are usually more expensive to employees on their own. It frees up the amount of money that the employee will have to shovel out.
According to the article “Driving Success: How You Innovate Determines What You Innovate”, there is a few key components that can be implemented when incorporating traditional benefits with innovation benefits. These are known as the seven innovation rules: (1) Line up the variety of innovations to the organizations industry. Innovation may or may not be the key to success for the company’s overall business strategy; It may be determined by the types and amounts of innovation needed to support the business strategy. (2) Deal with the expected pressure concerning creativeness and worth.
A company needs strength in both. Creativity without the ability to translate it into profits (for example, execution and value capture) can be fun but it is unsustainable; profits without creativity is rewarding but only works for a short time. (3) Reduce the effect of organizational antibodies. Innovation necessitates change and change stimulate explicit routines and cultural norms that act to block or negate change. (4) Recognize that the basic unit or fundamental building block of innovation is a network that includes people and knowledge both inside and out of the organization.
A successful organization excels at fusing its internal resources with selected portions of the vast resources of the worlds capitalist economy. (5) Create the right metric and rewards for innovation. People react to positive and negative stimuli, and a company’s innovation is no exception. It will never achieve the level of innovation that is needed if people do not have the proper reward (Devila, Shelton, and Epstein, 2005, retrieved from: www. ftpress. com /articles).