Employee Reward: Payroll Cost Essay

Introduction

These are the costs that are incurred by the employer for the employee services. They usually include salaries and wages paid to the employees and the money paid to other benefit schemes like the health insurance scheme among others (Brandi 2005, pp. 2-5). It also involves money paid to insurance schemes on behalf of the employees behalf. It also includes the employees’ taxes. It is very important for a company to continuously review its payroll costs given that it affects the net income of the company. The payroll costs are also subjected to various laws and regulations. Errors in the payrolls might negatively affect the morale of the workers which might cause lower productivity. This is because employees are always responsive to the payrolls. The payments should be timely and the remunerations have to be as accurate as possible (Ventrice 2011, pp. 66).

The current business environment has been changing at a constant rate hence the need for companies and business enterprises to review the payroll costs. This is the only way for a business to remains viable given that the business environment is ever-changing (Cross 2006). Today’s employee is for instance prone to numerous deductions like taxes, benefit schemes, Medicare, insurance among others and if the payroll system is not reviewed, a company might easily run at a loss or underpay its employees. Employees are usually subjected to income taxes, social security, Medicare, and other local tax withholdings which include school taxes among others.

The employers must therefore ensure that their payroll costs are viable (Edward, 1952). Some of the tax payments for instance are usually shared by the employer and the employee. In the Medicare as well as the Social Security Tax, for instance, each of them pays half of the total amount (Edward, 2003). The employer is usually obliged to pay his/her share of the employer’s payroll tax. He/she has to prepare reconciliation reports and give an account of the payroll cost by means of financial reporting. They are also obliged to fill the payroll tax returns. This is beyond the issuance of the employee’s paychecks.

The payrolls are generated by companies frequently depending on the job grade or the company. They are generated daily, weekly, and monthly or even annually. Due to the constant changes in the business environment, the payroll today is complicated than in the past (Frey 2001). Most of the regulatory agencies usually demand a lot of consistency and accuracy in the payrolls. The company or business enterprise might therefore be forced to outsource the payroll preparation services so as to reduce the cost of having in-trained payroll employees or managing the payroll systems and software. Outsourcing might particularly be of great importance to new businesses that might find the task of preparing payrolls difficult to manage. Business management mostly deals with taking the appropriate measures to change what should be changed when there is an alteration in the business environment. It is never about operating in circumstances that can be termed as ideal.

Main Body

Rewards are very important for employee motivation (Goldstein, 2007). Today’s businesses are faced with the challenge posed by global competition. Most companies, therefore, tend to adapt reward systems that are meant to incentivize the workers towards ensuring that the goals of the company or business enterprise are met. Rewarding employees constitutes recognizing the efforts as well as the roles played by them in ensuring that targets of the organization are met. These are meant to motivate them hence increasing productivity in the long run. Some of the reward practices involve salary increments, promotions as well as monetary reward. They are usually based on the evaluation of the performances of the workers.

Reward systems might lose their purpose if their basis is on profit sharing. Such reward systems just result in worker dissatisfaction. It is a clear fact that profit does not only depend on the performance of the workers but there are other external factors that play a significant role in the realization of such profits. Rewarding employees on the basis of profit-sharing is usually perceived as unfair given that it affects other employees in the long run (Goldstein, 2007). This might result in the affected workers developing negative perceptions and attitudes towards the organization, reduction in productivity, absenteeism as well as higher employee turnover.

In most cases, there are some inconsistencies between the reward practices and the reward policies (Grimaldi 2005, pp. 4-5). The practice is usually supposed to be organized and it has to be incorporated into the experience as well as habits of groups or individuals as they undertake their activities. Policy on the other hand formalizes a system’s goals and the ways of attaining the same goals. It usually aims at structuring certain areas of practice. There however seems to be a big gap between the policy maker’s objectives and the actual reality on the ground given that practice is seen as a sign of resistance to change and to the policy as well.

The policies which are usually passed at a higher level are usually in most cases delinked from the actual practices which usually involve implementation on the ground. This link usually needs to be strengthened. Policymakers are usually supposed to make policies basing their decisions on the practical observations that are made at ground level. In some cases, the actual needs on the ground might differ from the policies that are passed. Some of the policies that are passed might for instance not be applicable at the ground level. There is a great need therefore to ensure the agreement between policy and practice (Henneman 2005, pp.3).

The business environment today poses several challenges due to the changes being experienced (Liebman 2000). With globalization, business enterprises and companies have been faced with new challenges especially those affecting the reward policies as well as the practices. Most business enterprises have to change their reward practices and alter reward policies. Most of the reward practices have had to shift towards being based on high performance and with no detrimental effects to the payroll cost of the company or business enterprise (Liebman 2000, pp.66). Most of the reward practices which were not based on talent and capability have had to shift towards the same so as to ensure that the reward system remains viable. With trends such as globalization, more opportunities for growth have emerged, and at the same time talent that is capable of high performance so as to seize those opportunities has shrunk. To change with the rapid changes that are experienced in the current business environment, organizations have to formulate reward policies and practices that should cater to the business needs and play a big role in the development of innovative strategies that would ensure success for any organization (Liebman 2000).

The rewarding should be on the basis of the internal and not external factors hence the need to motivate employees to embrace attitude change (Johnson 2006). Managers have been experiencing challenges particularly when it comes to the formulation of viable reward systems, policies as well as adapting the right reward practices. The reward practices need not only be legitimate but attainable as well. The reward policies and practices need to have specific targets. They should be reasonable and justifiable at the same time. All these are supposed to be deduced from the organization’s performance history, the business strategy, and the business environment that is competitive. If the participants of the reward system or workers are dissatisfied, viewing it as unattainable, unspecific and instead of motivating them it turns out to be the cause of their frustration, then the whole system might be a failure(Johnson 2006).

Current and emergent practices with regard to reward

Today’s manager has the responsibility of providing useful feedback for it to act as a guideline to the reward policies and practices. It should encourage behavior change so as to increase productivity (Shiels 2007). Such feedback needs to be frequent, objective and purely based on the performance in relation to whoever receives the reward. The right policies and mechanisms need to be put in place in order to allow the employees to initiate the appropriate changes in their work procedures and even the methods. They should be allowed to incorporate the emerging technology in their efforts to improve their performances and realize their goals (Shiels 2007).

Considering the use of technology, for instance, the Executive Information System otherwise known by the abbreviations EIS, the system can be of great benefit when it comes to the evaluation and rewarding of the employees (Laureate 2001). It encompasses the computer hardware as well as software that are used in the tracking of appropriate data that reflects the performance of a business, presenting it to the managers. This is usually very significant in the planning and decision-making processes. By employing such a system, it is easier to monitor not just the sales, but inventory and receivables as well (Odell 2005). The issue of comparison also becomes easier. Such a system makes it easy for the company to monitor and easily spot any deviation from the normal production hence making the most appropriate changes on time towards rectifying the same. Such a system is usually of great importance in determining the performance of individual workers or a group of employees within a department. In such a case, it becomes easy to direct the reward towards the employees that are performers rather than depending on speculations. The system also makes it easier for the manager to notice underperforming employees and take the appropriate measures to address the same (Odell 2005, pp. 22)

Such a system can be of great help in ensuring that the goals of the organization are met. The current business environment is changing and more emphasis is directed towards ensuring consumer satisfaction. For any organization to succeed it must exhibit resilience, be adaptable and accept change. The human resources managers are therefore challenged to be good planners, organizers and at the same time lead and control the human resources. Organizations have had to adapt to the current trends of worker training and development which are aimed at ensuring increased performance (Parker 2001, pp.88)

The current reward system encourages teamwork considering the fact that certain goals and objectives are attainable in an organization only if teamwork is enhanced (Rauch 2005). The overall output is usually higher whenever a task is handled by a team rather than a group. The recognition needs to be timely either immediately or as planned. Such recognition might be in the form of monetary or even non-monetary depending on how significant the contribution was. The recognition and rewards need to target individuals and the relevant groups. They should be initiated by the manager and other employees and the aim should be to improve the productivity of the employees and at the same time improve their quality of work. Customer service is also enhanced whenever the reward systems become a success (Rauch 2005, pp. 5-11)

Statistical support is usually of great importance in measuring the impact of a department’s operation. The appropriate reward policies and practices have been known to enhance leadership skills among the employees, encourage innovativeness, enhance communication, responsibility, and accountability, ensure high productivity, enhance commitment, and raise the morale of the workers among others. They enhance positive behavioral change among the employees. All these culminate into the increased profits (Heley 2004, pp. 67).

A company such as Panasonic Corporation rewards its employees by offering them benefits. The reward system is usually based on an effective assessment of the employees’ performance. The corporation has training programs aimed at improving the employees’ effectiveness (Pettitt 2008). The company sets goals that are supposed to be met by employees and the individuals or groups that meet such goals are usually recognized and rewarded. The recognitions and rewards are also aimed at inspiring corporate and cultural change. The changes have been a success and they have to lead to the company’s recognition through receiving prestigious awards(Pettitt 2008). The employees of the organization engage in discussion forums that tend to focus on the progress of the company and this enhances accountability. The recognition programs of Panasonic Corporation have been designed so as to reinforce the goals and mission of the company at large and those actions which support them (Pettitt 2008).

Most companies have reward systems that focus on employee performance. They are attainable, acceptable, and specific. This seems to be the only way by which an organization can meet the payroll costs and at the same time ensure greater productivity.

Conclusion

The current business environment seems to be changing at a fast rate and the employers have to keep with the changes and at the same time make profits. The current employer is faced with the challenges of very stiff competition brought about by globalization. The companies or business enterprises, therefore, have to enhance their productivity and at the same time keep the employees motivated. The employees have to be motivated to change their perceptions, attitudes, and behaviors. The motivation could be in the monetary as well as non-monetary form. The performing employees may for instance be promoted or awarded depending on the impact of their activities and performances in the attainment of the set goals of the organization. The reward policies must be approved by both the managers and the employees. The rewards and recognition need to encourage the employees to be more productive hence increasing the output of the enterprise (Trupin, 2006).

The reward system has to be based on employee satisfaction, transparency as well as fairness. It should encourage innovation and the development of skills and talent that are needed for the goals of the organization to be realized. The employees are motivated and recognized through praising them as well as the accomplishments that they have made. The employees are encouraged to use their talents and skills to the fullest so as to enhance the achievement of the organization’s goals. For this to be effective, the employees are encouraged to request the appropriate technological tools and equipment in the realization of their goals and the overall goals of the organization (Ventrice 2003).

The employees are also subjected to other career development strategies like on the job training. This is bound to enhance the productivity of the respective workers. The improvement of the employee productivity results in the overall productivity of the organization which raises its profit and in the long run gives it a competitive advantage over the other competitors.

Performance coaching usually aims at establishing a reward and recognition culture that not only focuses on the learning but also looks at the behavioral elements of an organization’s employees. There is a need for the employees to shift their behavioral traits to those which work towards ensuring that the objectives of the organization are met. The reward system needs to be geared towards encouraging trust and making the employees feel appreciated and respected at the same time. It needs to be based on fairness. Most organizations find it difficult to prepare the payrolls given that the task is usually complicated and demanding. Most of them, therefore, resort to outsourcing the services. The payrolls are usually required to be accurate and consistent hence encouraging the employers to outsource the services so as to reduce the costs involved. The preparation might require the employer to do on the job training for the employees to be able to undertake the same. The cost of maintaining the payroll systems might also be slightly higher (Witte1992).

Recommendations

For any organization to ensure that its payroll cost is manageable, there are various undertakings that need to be observed some of which might include;

Rewarding the employees depending on their performance. This is made possible by evaluating their output in comparison to the desired goals of the organization.

Ensuring that the reward system is fair

Ensuring that the reward policies and practices are in agreement. The policy formulation has to be based on the real and practical situations on the ground.

For the reward to be perceived as being effective, the motivation should be based on internal factors and not external ones. The employers need to exhibit a change in attitude that is geared towards encouraging the positive perception of the employees towards the work.

The rewards should be in form of monetary as well as non-monetary rewards like promotion, public recognition among others.

The rewards should be at individual and group levels. The individual-level reward encourages accountability while the group level reward and recognition encourages teamwork which is essential for the success of any organization.

Reward and recognition should encourage innovation, development of skills and talent that are needed for the achievement of the organization’s objectives.

The employees should be motivated and recognized by praising them and their accomplishments.

The employees should be encouraged to use their talents and skills to the fullest so as to enhance the achievement of the organization’s goals. For this to be effective, the employees need to employ the appropriate technological tools and equipment in the realization of their goals and the overall goals of the organization.

Performance coaching should be done with the aim of establishing a reward and recognition culture that not only focuses on the learning but also looks at the behavioral elements of an organization’s employees.

The reward system needs to be geared towards encouraging trust and making the employees feel appreciated and respected at the same time.

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