Hrmt412 Compensation And Benefits: Holland Assessment Answers

Answer:

Introduction:

Human Resource is one of the most significant and demanding resource an organization can ask for as it plays a major role in attaining the objectives and competing at the highest level in the market place. Human resource over the years has been assorted as one of the difficult things to administer for the fact being human beings can be needy along with being greedy. Business does find it difficult at times in offering its employees a first-rate package of benefits. As per Verwaeren, Van Hoye and Baeten, (2016), providing benefits and plans of compensation as per the employee needs is a significant part of the puzzle that revolves around retention and recruitment, posing a obscurity in scheming and sustaining a workforce that is stable in nature. The Holland Enterprise at the XYZ city have been employing around 3500 employees and has been facing challenges in terms of retention of employees. Since 2010, it has lost around 25 per cent of its staff and the in-depth analysis from the exit interviews point towards a system that has been stated as inequitable and uncompetitive in nature. In the present scenario, the companies have been running on thinner budgets, fuelling competition in magnetizing skilled and knowledgeable employees. Holland Enterprise has been no exception to the fact that for competing in the marketplace they must be able to preserve their employees and hold on to their skill personnel.

The company’s philosophy has been exerting a pull on and retaining skillful and qualified employees through rewarding the performers who have been doing well in order to keep hold of the high quality (Davidson,  Dey and Smith, 2015). This paper would be dealing with the various recommendations in the package of compensation and benefits. A compensation strategy that is sound in nature must integrate inputs in business and operations, employee preference inputs, practices in the labor market and within the industry. The different issues in the resources along with the salaries and startup correspondence, issues related to environment inclusive of the workload and the administrative concern. As per Gerst and Grund,  (2017), it also takes in the strategies in retention and the process of salary that have been explained in profundity and the information taking in prior reports, interviews of the old staff members, salary data, benefits and packages of startups in making recommendations.

Mechanism of Determining Compensation:

The salary and compensation formulation provisions for employees takes into account the following considerations in account like the budget as per the departments, internal and external equity along with their education, skills and experience. According to Hofmann, (2015), external equity takes in the comparative salaries that are being paid in the marketplace where the company is been fighting hard to select and retain the employees of similar kind. Analysis of jobs, evaluation of the same along with pay policy, pay survey analysis and structure of pay generation are some of the necessary steps in augmenting the package in compensation. The practices of competitive pay can be resolute by the participation in different surveys being conducted on salary. Similarly ‘internal equity’ is being used in describing the proportional salaries that are being paid to the employees working within the same grade level in an organization (Cerdin & Brewster, 2014). For making a cross sectional assessment of the policies in compensation and salaries of the staffs, the salary surveys are engaged. The practices of pay for the next financial year would be evaluated through the data survey that has been acquired through various surveys about the extent of the positions symbolized in the organization. The company has been handling and administering base pay with the construction of pay in embracing the grades of pay and ranges. For instance, the staff members have a pay scale of 9000-9500 with the minimum of 9000 being paid to the employees who are being assigned to various positions for which he possesses the minimum required qualification with the maximum range being up to 9500 in that same position. The system range of pays like the mechanism of cost-control ensures that the majority of the entirely job knowledgeable employees would be paid at mid-point. The ones that are regularly exceeding the performance standards on a continuous basis are able to receive the salary above the midpoint.

Current Facts Evaluation:

In-depth of the market analysis states that there is existence of stiff competition within the marketplace for the professionals who are well-qualified and experienced in nature that makes hiring of new employees a challenging affair (Bieling, Stock and Dorozalla, F.2015). Hence, the organizations must put in more efforts in retaining the employees by providing them a compensation that is desirable in nature along with the benefit package. This city is the home of around 300 organizations operating in or around the area with most of the corporations dealing with the issue of development of human resources (Müller et al., 2016). High employee turnover for the low wages is one of the major issues existing in the marketplace. The other factor that can be considered is the contraction of the job market in Europe in recent years. The improvement in the economy is declining the factor of qualified applicants, with the employment in the job market gradually picking up. The marketplace trend has been indicating towards the fact that in the upcoming months there would be an improvement in the wages and other benefits as the organizations would be competing for fewer number of qualified and obtainable applicants. For developing the allocation of resources and dealing with the population that is ageing along with the regular measures of continuous globalization in securing fiscal sustainability and policy revision is essential.

Salaries and Benefits Data:

Table 1 highlights the fact that the average salaries of employees in Holland enterprise has been lagging to those of their rivals with an overall difference of -6.5 per cent in 2016-2017. The issue is most sensitive with the managers at the top-level with the present difference being of 7.4 per cent. Additionally, there has been a considerable raise of about 2 per cent in the differential of salary in the past two years regardless of the commitment of the management in offering average raise of the least inflation.

Table 1: Weighted Average Salary Differentials

The above table indicates that the Holland Enterprises salaries of the employees are lagging to those of the peer group by an average of about 7.4 per cent. In the additional depiction of the average raise of inflation plus 1.5 per cent are enough in keeping up with the peer group of members (Ledford, 2015). The total pool of raise is only faintly above the inflation mark and the employees with unexpected merit achieve raises that are well above the inflation.

Interview Findings:

 Eggers, (2015) stated that the major findings in the exit interview of the desertion employees, the interviews of the departmental heads and the executives regarding the cases of retention that has been successful or unsuccessful in nature divulges that the non-competitive salary depicts the most-cited retention factors, especially among the male section of the employee. On the other hand, the less frequently cited takes in the lack of assistance programs related to housing and deficiency of other noncompetitive benefits like the insurance related to health and the flexibility requirements with childcare alternatives (Moore & Viscusi, W.2014).

Role of Compensation and Benefit System:

The employees performance have been directly equating to the business performance. The system of compensation should not be only aligning with the needs of the business but must be able to contribute to the performers and attracting them in the best possible way. It is necessary to motivate employees that in turn increase the productivity of organization. Lacking in compensation would see no employees showing any sort of interest in working in this particular organization (Tornikoski, Suutari & Festing, 2014). Needs for compensation is to look into all the psychological and self-actualization requirements of the employees along with salary. Organizations must consider the employees that have been performing exceptionally well over a certain period and must consider in offering them with certain benefits and compensation packages that would motivate them to stay longer with the organization and perform even better. Compensation and benefit system helps in igniting the fire within the employees in developing new personal goals, attainment of which would benefit the company in achieving of their own (Sykes, Venkatesh & Johnson, 2014).

Recommendations:

The key factors that have been contributing to the retention of employees are the benefits, salaries, compassionate environments and the opportunities in growth. Employee retention is one of the major factors that the organization should focus on for investing on new employees every time is not feasible and it does involve a lot of time. The employees who are already into the system would understand the things and an extra effort from the company through training and other fringe benefits might enable them to put in that extra effort required for attainment of goals. To embark upon the deficiencies that exist at Holland enterprise in these areas along with reflection on tightening of the labor market as an important amendment in the recent HR practices and an augmentation in the expenses related to benefit and compensation is required (Buckley & Casson, 2016).

Certain other key recommendations are as follows:

1. A practical approach to the retention of the employees taking in the stipulation of about .12 per cent on an annual basis of the overall pool of salary for the market based adjustments of salary.
2. Annual entire raise pools should be besieged at around inflation plus 2-2.5 per cent in keeping pace with the rival companies and reward the merit that is exceptional and ordinary in nature.
3. Benefits of employees should be augmented by developing the contribution of the employer to the plan for family health by more or less 90-100 units per month per employee, mounting the new program of housing support and offering the extra options of child-care leave.

Model of Job-Based Compensation:

The pay construction suggested the compensation model of conventional job-based that consists of mechanism of pay-system that includes well-versed, detailed and upgraded description of jobs for every single position in the organization (Rogers, 2016). Job description is a significant step while conniving the system of pay as it overtly recognizes the significant characteristics associated with the each situation facilitating each single attribute to be stated and weighed roughly with the compensable factors. Evaluation of jobs is a procedure in estimating and rank jobs in requisites of the total implication to the company, thus creating hierarchy in jobs. It also makes possible the structure of the organization and communicating the disparity in pay that exists between the jobs from the managers at top-level to the junior employees at the entry level. The points of the awards can properly dog the hierarchy position and the process of external survey in the pertinent labor markets can establish the weight factor, the rates in the pay. It also takes in the direct competitors or rivals that are operating in the same marketplace or location or within the same business atmosphere. The points that would be honored to each of the position during the procedure of job evaluation that can be summed up as totals and these totals can be put into use in establishing the pay grades as per the positions of the job in the hierarchy.  

Market Position:

The evaluation of one’s competitors is essential when focusing at the benefits and compensation. The employees that have been lost are being influenced through the profitable offers from the other rival organizations providing an overview of the probable opportunities in the market that might influence or entice the employees in leaving the organization. The main competitors of Holland enterprises are Austin Dues and Big Avenues. These organizations have been currently working in the marketplace of XYZ and are having hefty competitors. Thereby, Holland Enterprise must proffer benefits package that are comparable in nature in ensuring that there is retention of skilled personnel. Proper training should be offered to the existing as well as the new employees as with proper training the older employees feel themselves to be an integral part of the organization where they have the scope of bettering themselves. In case of the new employees training matters as they get time to settle down within the system and get to know things. There is a feeling among the employees that if the organization is spending money on employees in things like training and other related activities, they feel that zeal and motivation to pay it back through attainment of goals. The organizations should also be able to woo the skilled people or employees from the discussed competitors who might look for opportunities in attracting those people that matters to Holland Enterprise.

Strategies in Total Compensation and Benefits:

The strategy of compensation must be targeting the three important points of compensation that also takes into account the experience level, the positional hierarchy and the internal employee contentment. The usage of the conventional job-based model needs segregation of the strategy of compensation as per the organizational jobs. Each of the position in the organization must be compared to the standard of the market of the job. The statistics designate that employee average at the Holland Enterprise is 35,000 a year nationally while the average competition amounted to 30,750 on an annual basis. Moreover, the employee experience should be accounted for, as the employees would be gaining experience and accomplish a brink level of performance. There should be presence of appropriate increments and raises within the pay. The maximum amount of the raises can be predetermined at around 2-2.5 per cent for keeping pace with the competitors and gratifying both the excellent and regular merit per annum. The compensation in boosting the satisfaction of internal customers is in realizing through the planned benefits and the performance bonuses. Admitting the significance of the satisfaction of internal customers as an important contributor to expansion and growth of the business and the retention policies of the customer, offering rewards in order to encourage better performance becomes essential. A reward system that is easy to comprehend motivates and encourages employees in working harder for reaching the higher goals. An easy incentive system should be effortless for the workers in comprehending along with achieving at its lowest echelon in offering an invariable reassurance to the employees to work harder for attaining the more complex goals. If the system of reward specifies too high level of performance with early accomplishment of the procedure would be discouraging tough or hard jobs as employees might be ignoring it. A good package of benefits would be at rational expense in retaining the employees. Benefits of the employees should be augmented by improving the contribution of employer to the plan of family health by around 90-100 units per month per employee improving and mounting the program of new housing assistance and offering of the options of child-care leave to the females that are working within an organization.

Incentives per Performance and Merit Pay:

A plan that is tactical in nature for holding back the quality employees must take into account the benefits for rewarding the workforce exhibiting the commendable devotion in the business. This fact would further motivate the new joiners or the staff members in making a pledge for building a profession with the company along with preventing the hurdle of conventional employees to the other organizations. The pay cut option would make the older employees think more about the other opening. Merit pay is being associating pay with performance and has been the most often used systems in rewarding the workers based on the performance of the individuals. For being effective such a program must endorse and overtly communicate that rewards offered to the best employees would be perceptibly better than the regular growths provided to a worker who has been below average. The theory of compensation that is performance based for the employees recommends those employees who have been outperforming the other workers and the worker who has been performing just average needs to receive compensation in demarcated form. The organization must revise increase in payment for an employee that would be based on the four factors that includes performance; deficiencies existing in the market, overtime along with the living wage, alteration in the job accountability, knowledge change, competency and skill; transform in the market disburse for the job.

Conclusion:

The package of compensation and benefit is one of the most various methods or tools of the Human Resource that are being used by the organization in the employee management. For accepting the money worth that is being involved in the human resource management requires to guarantee the regular hard work for retention and motivation of the skilled labor workforce and seeing the system of compensation is not on any sort of island. It is crucial for the business in associating compensation and the package of benefits with the total objectives and plans and aligning the same with the scheme of HR. It is not always easy to bring in changes, and that too of such an extent, but then organizations must do everything to satisfy their employees as they are the biggest assets that the organization possesses.

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