Introduction
Effective business management is critical to the development of any kind of business activity. It is important that the leadership of various businesses implement strategies that not only lead to the profit orientation of the business but also encourage the development of an employee friendly environment. In the current business world, the issues of total compensation have been critical both to the business growth and the retaining of the employees. Many firms and business organizations use this strategy to boost their business development and growth.
Current and Future Trends in Total Compensation Plan
Currently, the trends in total compensation have taken a different turn as in many cases companies have to take into consideration that employees in any institution are categorized in different ranks (Pauly & Rosenbloom, 1996). It is therefore important that even junior employees in employment firms enjoy some of the advantages enjoyed by other workers in the high ranks. If good performance in a company is anything to go by, it is advisable that various firms develop strategic measures which can help in motivating its workers.
Due to the current financial problems, goal achievement should be rewarded for both individual employees and the organization concerned. This can easily help avoid demerits which might come about as a result of extensive total compensation which might in the long end affect the company negatively. In order to avoid conflicts in terms of compensation strategies, it is also important that compensation philosophy and direction be developed in writing. Such as writing should be reviewed by the board of directors and be agreed upon by the top management.
It is only through this way that the salary for each person in the different ranks of employees can be reached upon harmoniously. It is also through total compensation that a firm can help in bringing up the talents of its employees. Pauly & Rosenbloom (1996) insinuate that it is advisable that despite encouraging employees to concentrate on activities related to work which are in most cases indoor activities, employees should also be encouraged to develop their talents by participating in outdoor activities like games.
Internal and External Equity
For total compensation to be deemed fair by the labor force, it should take care of internal and external equities in its course (Terpstra & honoree, 2003). Internal equity requires that pay be related to the relative worth of jobs. If this is taken into account, similar jobs within an organization will attract an equal pay for employees working under the same. External equity on the other hand advocate for an equal payment of workers within an organization so that the payment is similar to that of other workers in other firms. The total compensation should therefore be a little higher than that of other firms or be at the same level with the compensation plans of other firms. In order to retain current employees, total compensation needs to be high enough to attract the employees and even more applicants.
According to Terpstra & Honoree (2003), it is important that internal and external equity in organizations is observed to ensure that employees are comfortable with salaries assigned to them. For workers already working for other employers in other firms, it is advisable that premium wages be offered to them. Employees are fond of quitting jobs in which the compensation is not competitive enough hence resulting to a higher employee turnover. Such workers normally shift to other firms which offer a better pay for the same job.
It is important that firms adhere to state regulations which are to direct on most of the compensation policies in its territory. Terpstra & Honoree (2003) argue that this will help to control such problems in the business world such as inflation which can be disastrous if allowed to crop up. Government policies in business matters are also essential in avoiding monopoly of some firms in the job market. Such monopolies which can be easily created by firms if state regulations are not well implemented can lead to a shoot in compensation hence making many employers not able to acquire or retain highly competitive employees.
For the survival of any kind of a financial organization, it is advisable that wage management processes and rationale be given much weight. Bogart (1969) asserts that wage and salary system should be closely related to employee needs and company goals. Riordan manufacturing company in our case is supposed to ensure that all the organization’s stakeholders have access to wage management techniques used. Salary management should be done in such a way that the costs are effectively controlled. An effective control of costs in wage management helps to retain and even get more workers at a reasonable cost. As it has currently been evident in many organizations, without effective compensation management, workers could be over or underpaid hence both having great impacts on the company involved.
According to Bogart (1969), in wage management, salary adjustment should be flexible. Flexibility in salaries not only delights the employees but also motivates them towards achieving higher goals for the company. Wages should be used as motivation factors so that employees can strive to attain unachieved goals being assured of getting promotions which attract an increase in salary in the long end. The company in question should also take into consideration the employee demands and the impact they have on the firm’s general performance.
It is essential that any kind of a business organization should have wage and salary ranges. Riordan manufacturing Company in our case must have an overall salary range of all jobs thereby assigning each job grade a salary range. Salary ranges makes it easy for business firms to adjust salaries to individual employees depending on their performance. For a good salary and wage management strategy to be achieved, the actual performance of an individual employee and how the performance relates to his or her salary should be taken into consideration.
Bogart insinuate that those employees who record good performance should be in a better chance of getting higher salaries than their counterparts but the increase in the salary should be within the job grade salary range stipulated by the wage and salary management department (1969). If the previous statement is anything to go by, it is advisable that the manufacturing company in discussion effectively rewards employees in the firm in accordance with their performance.
Retirement and How Participation will be Driven
The Riordan Manufacturing Company should have in its business records the names of the employees who are to retire. This will be of importance. As in, the company will be able to know the exact number of the employees who are to retire and the subsequent number of the vacancies created. The company’s governing body should go ahead to make plans in advance, on the replacement of those who are to retire.
This will be done purposely to avoid inconvenience after retirement exercise. After the replacement, the company should also take the duty of orientating the newly employed employees to their new places of work and the kind of work to do. It is only through this that they will be able to streamline themselves in the shortest time possible; an act that will ensure that the initial strong team spirit in the company is maintained and therefore, the forward driving of the company activities is enhanced.
On the retiring employees, the company should ensure that their final salaries and allowances are paid in time and their retirement benefits availed to them promptly upon their retirement. If possible, these can be accompanied by rewards and presents from the company as just but a way of appreciating their services that they have been rendered to the company (Walker, 1991).
In addition, the company should have a financial plan outlining the funds for each and every retiring employee. This is aimed at eradicating the delays of the release of the funds of these particular individuals.
The influence of the organization’s financial condition of the total compensation plan
Organization’s financial condition plays a critical role in determining the total compensation plan for its employees (Walker, 1991). It is therefore important that Riordan Manufacturing Company should scrutinize on its financial ability before engaging in any type of a total compensation strategy. The compensation strategies should correspond to the financial base of the company to avoid bankruptcy. In many if not all cases, it is the imbalance between the compensation policies of a firm and its financial capability that lead to their collapse.
Communication Modes
Communication is essential in any company or organization. It can be either verbal or non-verbal or the combination of the two. It can be conducted externally or internally within the organization. There is a dire need for effective communication channels to be staged to ensure that there is efficient flow of communication between employees and employers. Some of the means by which communication can be accomplished in a company include the following:
Use of Letters and Memos
These letters and memos can be written and distributed to the targeted individuals. Be either employees or managers of the company and by so doing the information about the plans must have reached them.
Use of the Internet
The company’s governing board should have in its records the email addresses of all the employees so that it will be much easier for the plans to be communicated to them for they can be easily reached by emailing them. As well these plans can be posted on the organization’s website so as to reach those who normally visit the site.
Phone calls and Texting
The phone calls and texting of individual employees can serve the purpose. This can only be possible when and only when the company has the phone numbers of its employees. However, this method will be most effective if the number of the employees is that not big.
Use of the Radio and Television
Massive advertisements about the plans can be created by the company secretaries for either the radio or television to ensure that those who use radio and television as a means of getting information, are reached.
Use of Newspapers and Magazines
Articles about the plans should be availed to the newspapers’ and magazines’ editors to be published so as to ensure that newspapers and magazine lovers are also reached.
Use of Notice Boards
Notice boards situated at different and easily accessible areas in the company can as well be of great importance in as far as informing the employees about the plans is concerned. Created posters should be amounted onto these notice boards for employees to read.
Conclusion
In conclusion, it is advisable that every business organization should give matters of total compensation much weight if good performance is anything to go by. Total compensation of employees is not only important in achieving a company’s goal but is also essential in attracting more qualified employees and retaining the already existing ones. In order for a good salary management plan to be achieved, job evaluation, measuring of actual employee performance and control of costs are essential. Riordan manufacturing company in this case should take great care in trying to manage the wages and salaries of the workers so that neither the workforce nor the company gets into trouble. This helps is underpayment or overpayment of the employees.
Reference
Bogart, A. (1969). Dealing with wage and salary compression. Compensation Review (Pre-1986), 1 (4), 6-6.
Pauly, M. V., & Rosenbloom, J. (1996). Using a total compensation approach for wage and benefits planning. Benefits Quarterly, 12 (2), 47-47.
Terpstra, D. E., & Honoree, A. L. (2003). The relative importance of external, internal, individual and procedural equity to pay satisfaction. Compensation and Benefits Review, 35 (6), 67-74.
Walker, D. (1991). Current developments in employee benefits (part I) – executive compensation, fringe benefits and employee business expense reimbursements. The Tax Adviser, 22 (11), 699-699.