Hrm 531 Employee Compensation Paper

Employee Compensation
University of Phoenix
Human Capital Management 531 Employee compensation can be a very complex issue in any organization. This area combines basic human resource concerns as well as financial aspects of the organization. When dealing with compensation, an organization must balance the employee’s expectation and its own financial abilities. Employee compensation not only covers the salary but also includes other indirect benefits that may be part of a total compensation package. Compensation packages are set up to appeal to potential employees within a competitive business world. In other words, “compensation is the total of all rewards provided employees in return for their services. The overall
Nonfinancial compensation consists of the satisfaction that a person receives from the job itself or from the psychological and/or physical environment in which the person works. This aspect of nonfinancial compensation involves both psychological and physical factors within the firm’s working environment. The various rewards described comprise a total compensation system” (p. 277) Organizations must follow certain guidelines to design a general compensation package that may be customized to each company as well as each position. Organizations must pay special attention to the indirect benefits that they can offer their employees. For example when offering incentives and bonus plans, companies must be clear and specific to avoid or minimize misunderstandings. End-of-year bonuses are usually expected as part of the employee’s salary, therefore other incentive and bonuses may be added and reserved for employees who excel in their performance and help the company attain their strategic goals. When determining the various benefit plans, an organization must conduct intensive research on the long term financial
In this case, InterClean is expanding operations into Puerto Rico. Although Puerto Rico is a commonwealth of the United States, the country is ruled by its own constitution. Labor laws differ from that of the United States and the company must ensure to abide by any law that pertains to the compensation of employees within the territory. According to Cascio (2005), “International compensation presents special problems because salary levels differ among countries. To be competitive, firms normally follow local salary patterns in each country. Expatriates, however, receive various types of premiums (foreign service, tax equalization, cost-of-living) in addition to their base salaries—according to the balance-sheet approach. Benefits are handled in terms of the best-of-both-worlds model” (p. 663) Aside from the labor laws issues, InterClean must pay special attention to the cultural adjustment of its team. The company must provide orientation in terms of the new culture and new business models that differ from the United States. The team may benefit from cross-cultural training, foreign language classes or interpreters and introduction to the geographical