Designing Compensation Systems and Employee Benefits Essay

A requital system has an important role in a club. An ideal chip in backment system canful motivate employees to provoke their trading coifance. An organization can wasting disease adequate hire to cover apt employees. Retaining sharp employees is important beca enjoyment they take c beant organizations grow and earn high-pitched profits. A well-constructed salary system is the key to an organization being winning and prosperous (Importance of Compensation, 2007).To further elaborate on the importance of remuneration, the differences amongst product line psycho analysis and melodic phrase evaluation and how these practices aid in creating knowledgeablely reconciled cheat kind structures leave aloneing be described, and details exit be minded(p) on the challenges that occur when creating compensations that ar two internally unchanging and merchandise competitive.Also, the fairness of chastity increases based upon quartiles will be discussed, the f undamental theory of restitution and how this concept applies to wellness cargon will be discussed, and the changes in the business environment and society that whitethorn impact the importance of de jure necessitate benefits will be described. Describe the Differences Between suppose abbreviation and Job Evaluation and How These Practices Help Establish Internally reproducible Job Structures Job analysis and meditate evaluation argon the key to creating internally lucid descent structures.An internally consistent compensation system will define the relative worth of each product line amongst all jobs in a company. Companies use a basic principle when creating internally consistent compensation systems, which is jobs that require higher abilities, to a greater extent responsibilities, and more intricate job tasks should be compensated more than jobs that require lower abilities, lesser responsibilities, and fewer intricate job tasks. Internally consistent job structur es recognize distinctions in job traits that allow compensation managers to set apply based upon the distinctions.Furthermore, compensation professionals throw internally consistent job structures by using job analysis and job evaluation. A job analysis will peril the duties as well as compensation factors such as accomplishment and effort that be involve to sufficiently perform the job. The cases of the job analysis will be used to conduct the job evaluation. Job evaluation will create even out differentials for jobs within a company. The results of the job analysis help compensation professionals set pay rates by quantifying the chief(prenominal) similarities and differences between jobs (Martocchio, 2011).In the end, the job evaluation will categorize jobs jibe to their relative worth in the company. The relative worth of a job will be determined based upon compensation factors such as skill, job duties, and working conditions. Finally, job evaluation will guarantee in ternal equity because the protect of jobs will be determined based upon compensation factors (Williams, 2012). Describe the Challenges in Developing Compensations That are Both Internally Consistent and Market Competitive One challenge in creating compensation systems that are internally consistent and grocery store competitive deals with tractableness.Internally consistent pay systems harbour the potential to decrease a companys flexibility to react to changes in the pay practices of competitors because job analysis creates structured job descriptions and job structures. Also, job evaluation creates the relative value of jobs within an organization. Reacting to competitors may require employees to perform tasks that are non included in their job descriptions whenever competitive pressures arise. This process makes equity appraisals more difficult because the definitions of jobs become more changeable (Martocchio, 2011).Moreover, almost employees may resent being required to p erform tasks that are not in their job descriptions. These employees may believe that the employers are taking advantage of them because they are not being compensated for perform the extra job duties. As a result, employees could become unmotivated to help their employers repugn against competitors. Another challenge in developing compensations that are both internally consistent and market competitive is the bureaucracy that results from the internally consistent compensation structures.Organizations that develop job hierarchies entertain a tendency to create narrowly defined jobs, which results in larger number of jobs and staffing levels. This type of structure can place heavy compensation burdens on companies. Heavy compensation burdens can reduce profits for companies, which can affect whether companies use a market live, market match, or market incarcerate policy for compensating employees. Organizations that use the market lead policy compensate its employees more highl y than close to of its competitors. Employees pick up pay that is above the market pay line.Organizations that use the market match policy compensate employees based upon the market pay rates. Employees will discover pay on the market pay line. The market lead and market match policies can help companies attract and retain talented employees thus, the companies using these policies can obtain competitive advantage in a highly competitive business environment by using its talented employees. Furthermore, organizations using the market retrogress policy compensate its employees less than the absolute majority of its competitors. Employees receive pay below the market pay line (Martocchio, 2011).Furthermore, a company should not be forced to choose the market lag policy because of heavy compensation burdens that could result from bureaucracy. Some companies may use the market lag policy as a cost savings method to offset heavy compensation burdens. A market lag policy could preven t a company from attracting and retaining talented employees, which could affect the fighting of a company. Moreover, a company could lose customers and profits if it does not nonplus the talented employees in place to produce goods and operate than can compete with the goods and services of competitors.Two Employees Perform the Same Job and Each get Exemplary Performance Ratings. Discuss Whether it is Fair to Give One Employee a Smaller Percentage virtue Increase Because His Pay Falls inwardly the 3rd Quartile But Give a Larger Percentage Merit Increase to the Other Because His Pay Falls Within the 1st Quartile and relieve Why Supervisors use the virtuousness pay storage-battery power system to designate merit increases to employees. A merit pay grid contains a pay identify for a pay grade. The pay kitchen range is divided into four quartiles. Employees with the last salaries fall into quartile 1. The salaries increase as the quartiles increase.Employees with the highes t salaries fall into quartile 4. Furthermore, the lower an employees pay waterfall within its designated pay grade the larger the percentage pay raise. For example, if two employees perform the same job and both employees receive subtile performance ratings, the employee whose pay falls in quartile 3 will receive a nigglinger percentage merit increase than the employee whose pay falls in quartile 1. The employee whose pay is in quartile 3 may receive a 7% merit increase for excellent job performance whereas, the employee whose pay is in quartile 1 may receive a 12% merit increase for excellent job performance.Furthermore, using the merit pay grid may be logical notwithstanding not fair. It is logical because compensation professionals decrease merit pay increase percentages as quartile ranks increase to insure employees advancement done their pay ranges. If employees in quartile 1 and quartile 3 were to receive the same merit pay increase percentage, the salary for the employe e in quartile 3 more than likely would exceed the maximum pay rate for the range quicker than would the salary for the employee in quartile 1 (Martocchio, 2011).Moreover, the merit pay grid may be becharmed as unfair because employees performing the same job and displaying the same amount of effort and job performance are not receiving an equal percentage merit increase. Employees may view this procedure as an unfair work practice. Furthermore, the employees may believe that the company places more value on some employees job performance more so than on other employees job performance. Discuss the Basic pattern of damages and How This Concept Applies to Health Care The basic concept of amends is to interpenetrate risks. riskiness does not mean that an unfavorable contingency will occur but that there is a possibility of an unfavorable incident occurring. All persons have the risk of suffering a major illness. Thus, the whole concept of damages when relating to health vexatio n is that an individual will be able to spread his or her risk among other people so that if an unfavorable incident occurs, he or she will not be overwhelmed because of high health care costs ( generalise the Concept, 2012).In the unite States, health care is classified as a eight-fold payer system, which means that multiple parties are held accountable for paying the costs of health care. The multiple parties can include the government, employers, labor unions, employees, and unemployed individuals (Martocchio, 2011). Moreover, damages allows an individual to pay a few hundred dollars a month in level premium rather than having to pay a $50,000 surgery bill once (Understand the Concept, 2012). Finally, health-related expenses can become dear(p) thus, it would be wise for individuals to have some form of restitution for health care.Health insurance covers the costs of respective(a) services that promote sound mental and physical health such as physical exams, surgical proced ures, and psychotherapy. Normally employers enter into contractual relationships with insurance companies to provide employees and possibly their dependents with health care. Moreover, the insurance policy or contractual relationship will specify the amount of gold insurance companies will pay for health-related services such as physical exams.Furthermore, employers pay insurance companies a negotiated amount or premium to create and sustain insurance policies (Martocchio, 2011). Health insurance premiums are costly. The average monthly health insurance premium for an employee is $309. 03. The average monthly health insurance premium for an employee and his or her family members is $708. 83. Numerous private sector companies make it mandatory that employees pay a portion of health insurance premiums because of the high costs.Employees only contributed a small percentage toward health insurance premiums in 2008. Moreover, employees with single coverage contributed virtually 19% and employees with family coverage contributed around 29% (Martocchio, 2011). Except For the Family and Medical exit turning, the Remaining Legally Required Benefits Were Conceived Decades Ago. Describe the Changes in the Business milieu and Society That Might Affect the Relevance or Perhaps the Viability of every of These Benefits There are several legally required benefits in the United States.Legally required benefits are the benefits provided by the Social Security Act, which are retirement unemployment insurance old-age, survivor, and disability insurance and Medicare. Other legally required benefits are workers compensation insurance and family medical leave. The United States government created legally required benefits to protect individuals from calamitous incidents such as unemployment and disability. Legally required benefits try to maintain the flow of family income, promote worker safety and health, and assist families in critical situations.Furthermore, providing emplo yees with legally required benefits can be costly to companies. Present day, companies in the United States spend an average $4,400 for each employee annually to provide legally required benefits (Martocchio, 2011). Finally, the effect that legally required benefits have on costs and the competitiveness of businesses could affect the sustainability of legally required benefits For many years, there have been genuine concerns that there will be omit of funding to provide the legally required benefits, especially the social surety benefits.There are continuous political debates about how to safeguard the viability of social security programs. President George W. Bush signed an executive order that launch the new Presidential Commission to Strengthen Social Security. Politicians have debated the advantages and disadvantages of differing solutions to beef up the Social Security system. The administration of George W. Bush focused on back up tax credits for persons who save for re tirement and promoting additional savings through employer-sponsored retirement plans.Furthermore, the Democratic Party suggested enhancing the tax under the Federal Income Contributions Act to strengthen the trust fund. However, business leaders have opposed the trace of the Democratic Party. Business leaders, especially small business leaders are concerned that the increase in tax will lower company profits (Martocchio, 2011). Legally required benefits may hinder businesses in the suddenly term because these benefits require sizeable employer expenditures. Employers are required to make contributions that are mandated by the Social Security Act and several state workers compensation laws.These mandated expenses prevent businesses from investing these funds in direct compensation programs knowing to increase productivity and product or service quality (Martocchio, 2011). If the money for mandated expenses could be used for compensation programs then the company could increase it s competitiveness. Furthermore, enhancing productivity, products, and services can help businesses become strong competitors against its competitors. Conclusion In conclusion, a job analysis will reveal compensation factors that will be used in the job evaluation to determine the worth of jobs.Compensations that are both internally consistent and market competitive can affect a companys flexibility to respond to changes in the pay practices of competitors, and companies have to deal with the heavy compensation burdens as a result of bureaucracy. Usage of the merit pay grid is logical but unfair. Insurance allows employees to share the costs of health care with multiple parties. The effect that legally required benefits have on costs and the competitiveness of companies could cause companies to view the mandated benefits as burdensome. Finally, compensation will always have a snappy role in the strategies of companies.