Best practices in compensation and benefit
The purpose of this paper is to analyze the best practices in compensation and benefit strategies adopted by high performing global companies. This paper reviews peer reviewed academic journals that talk about compensation and benefits and find their relevance in the global companies. This paper discusses journal that talks about the two different impacts of individual performance based compensation: over confidence and “perceived” inequity in organizations that have implemented individual based pay. Though individual performance based pays are widely recognized, this paper points out to socio political situations like “unionized” work environment where the performance based pay is difficult to be implemented. This paper also mentions jobs like teaching where there are constraints in measuring performance. Team based compensation improve synergy and improve team culture. The paper looks into “cross-team” performance goals which can bring two different teams under a single goal. Impacts of benefits on employers, employees and the society have also been examined in the paper. Employee benefits of stock ownership trainings and flexible benefits have also been covered. Practical application of these benefits in the various facets of the industry has also been analyzed.
Compensation and benefits strategy is an integral part of an organizational strategy which helps the organizations to attract good talent, manage performance and retain talent. Compensation and benefits are now strategically seen as investments in human resource rather than an operational cost .Among the employee compensation methods, this paper analyses - performance based compensation and team based compensation. Among the employee benefits, this paper deals with how benefits are important for the employee, the employer and the society. Key types of benefits have also been discussed. This paper analyses the peer reviewed academic journals with the help of best practices in the multiple industries through appropriate case studies. Through this study, the relevance of the compensation and benefit schemes in different contexts and scenarios is examined. Individual Performance Based Pay
There are “psychological costs” involved in performance based pay. Social comparison and over confidence are two factors that create psychological costs in a performance based pay environment. In performance based pay, pay will inevitably differ between employees and it will lead to pay comparison between peers. If the input (performance) and the output (pay) are justified objectively with data, then it will result in less psychological cost due to pay comparison. But, if the rationale behind the decision is not substantiated, then it will result in psychological cost. For instance, employees might believe that they have not got the credit for their hard work. They can think that the pay did not match with their performance. It will lead to reduced effort, envy, attrition and the behaviour of pulling down other employees in the same organization. The Journal mentions that human beings are naturally over confident at works they do regularly. Over confident employees’ bias towards their ability creates the “perceived inequity”. While performance based pay is successfully implemented as a “variable” component of the pay in various multinational companies, some companies find it difficult to implement because of work culture and socio political situation. For example: Telstra, Australia’s leading mobile services provider faced a lot of opposition when it tried to implement performance based pay. The employee unions were not receptive to performance based pays and also the agreements on the measurement of performance was harder to reach. Transparency is one of critical factors in the success of performance based pay and if the management is not transparent in its policy, then performance...
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