Human resource managers (also known as HRM) and professionals play an important part in a number of aspects within a successful business. When it comes to HRM they have a variety of roles within an organization. HRM not only train and employ people they also play a vital role in developing and creating policies and procedures, but also strategies to retain existing employees. In addition, HRM are responsible for employee compensation and benefits which is, without a doubt, a difficult, monotonous and challenging process. Also, they endure the tedious task of creating, implementing and executing proper benefits and compensation packages for employees.
Compensation and benefits packages can include a number of elements that are created to attract potential and current employees. In the article HR Compensation Issues, Steve McDonnell focuses on how HR managers and professionals face a daily challenge on creating a fair yet competitive compensation and programs for competitive pay and motivating employees. In addition, he discusses how legal considerations need to be taken into consideration especially when it comes to the internal compensation competitiveness (McDonnell, 2015). HRM’s are constantly being creative to attract the best employees and retain current employee turnover. Examples of employee compensation and benefits packages can consist of the following:
1.Compensation – Primarily the key component in creating a package which can also include negotiation of salary or base pay. Compensation is also based on market research with similar jobs and the availability of (potential) employees with skills in the marketplace.
2.Heath Insurance – Aside from the compensation package the next greatest part of the package is health insurance. This is usually the ice breaker when desirable candidates are offered a position. Within the health insurance benefits dental and vision can also be provided by an employer. Employees often will accept better benefits in lieu of higher compensation which can be savings to an employer. Also, offering benefits helps attract and retain quality employees and shown to decrease absenteeism and improve health and employee morale.
3.Health Care Flexible Spending Accounts (FSAs): This offers employees to set aside money for emergencies on a pre-tax basis to assist in offsetting the cost of medical, as well as, dependent care expenses.
4.Retirement Plans - Plans such as 401k, are established or maintained by an employer that provides income (or deferred income) for an employee beyond employment or upon termination.
5.Paid Time Off (PTO) – Employees have the ability to receive pay for holidays, vacation, sick/personal days, along with bereavement or funeral leave. PTO also provides many advantages which reduce unscheduled absences and making an employer more striking when it comes to recruiting.
6.Long Term and Short Term Disability – Offering a full range of benefits allows employees to be protected if and when a disability surfaces. A result of this is can lead to a more productive employee workforce. Disabilities can be paid by the following: Employee-paid, employer-paid, or shared.
7.Tuition Reimbursement/Assistance – Provided employees meet work or grade provisions and requirements, this is known to be a generous benefit outlining specific terms and conditions. By offering this package for tuition, employees can further their education is a specific field related to a current position or promotion.
However, when crafting compensation and benefits packages HRM and professionals have to be strategic when it comes to the overall competitive external market and industries. Additional benefits and perks can be offered and are called voluntary benefits. Voluntary benefits are in addition to the initial benefits packages and are typically for generating higher employee morale and recognition as a whole. As Brad Reagan mentioned in his wall street journal article, Perks With a Payoff, “In an economy that demands difficult choices…almost all companies are looking for other ways to provide value to the employees at the same time” (Reagan, 2011). Adding value to employees with additional perks and discounts such as pet insurance, work-out (facility), auto and home insurance, wireless and computer savings, and even banking and lender discounts construct a stronger work environment. In addition, more perks and discounts, as well as, compensation and benefits packages lead to peak performance of employees which result in organizational growth and development from providing stronger customer service and satisfaction (Diaz. 2011, p. 165).
In comparison, in the article Utility Industry Faces Compensation Challenges by Amy Kaminski she states “While this new economic climate has introduced many changes, fundamental pay practices remain the same. Making informed and cost-effective compensation decisions geared toward retaining high-performing employees will lead to long-term success” (Kaminski, 2011). The economy is a strong factor when it comes to recognizing employees. In the article Problems – and Solutions written by Emily Glazer she states “These can't be easy times for human-resources executives. A weak economy makes it hard to promote or reward employees. Though unemployment is high, companies say they are strapped when it comes to finding qualified people for specialized tasks” (Glazer, 2011). In the Wall Street Journal article, Glazer continues to discuss the difficulties of creating opportunities by boosting internal opportunities so workers don’t feel like they are stuck (Glaser, 2011). HRM are going to the classrooms of colleges and universities to explain the importance of skills that are required for successful candidates. In order to compensate fairly and be competitive especially in this economy HRM are being more proactive in specific industries. Also, another challenge mentioned is seeking more employee referrals that lead to the employee referral program. By using this method businesses save money on the expenses of seeking hires externally from hiring head-hunters which the end results can be costly. Furthermore, generating a successful employee referral program increases the chances and opens more doors for find good talent. If a person is hired through the employee-referral program this allows the employee to gain additional compensation (or bonus) from the employer.
When it comes down to the core HRM is in a constant battle with trying to get employees to understand that they are not the enemy and they try to create a balance to keep all employees happy. As Jean Scheid mentions in her article Tips for Overcoming Employee Compensation Challenges, Business owners and HR managers face employee compensation challenges even more than in the past. Sheid also adds that there are people entering the workforce expect top salary wages with credential limitations even if they have a specialized degree. Often this promotes challenges on HRM when it comes to compensation and benefits especially during economic times when there are potential hires or current employees that want the world no matter what you offer or give them. Also, as Sheid mentions the following when it comes to facing employee compensation challenges:
-Identify the Employee: Basically, understand the needs wants and desires of employees and what motivates and drives them to keep up the morale and them happy.
-Identify Groups: Finding patterns by giving specific surveys and breaking them into categories: Money, Opportunity, and Training.
From analyzing the two groups listed above this will assist HRM in tackling further challenges as to how and what can be done to assist in keeping employees happy (Sheid, 2011). Is it that employees are seeking more money, additional in-house opportunities, training and education for loyal employees to help them go further with the company?
Although HRM has challenges with benefits and compensation they also are challenged when it comes to winning over current employee satisfaction. HRM has positive effects when it comes to building proper and encouraging working environments. Jeremy Hitchcock writes about HRM finding the suitable teams and to properly train managers to become effective employee ambassadors. Furthermore, Hitchcock makes a valid statement “We don’t own talent. We only lease it.” (Hitchcock, 2013).This approach will allow the managers of departments additional roles of overseeing employee problems and discipline when necessary. Also, these managers are given possible career growth within the company to further their career path. By assigning managers the task of reprimanding when necessary will limit the negativity that HRM deals with and place responsibility on the current managers.
Strengthening the employer-employee relationship is an important goal for human resources departments in any organization as mentioned by Ruth Mayhew in her article HR Issues and Challenges. In addition, she places emphasis and focuses on designing compensations and benefits where HRM professionals pay close attention to employee concerns and complaints. Also, she mentions that specialists face challenges to remain competitive and attract the best, most talented job candidates by continuously researching the industry within a geographical area. Mayhew also discusses in another article How Does Compensation Affect Employee Retention about the direct affect compensation has on employee retention and turnover. Compensation can have a positive outcome and influence on employee retention and an important way to delegate this approach is to effectively incorporate a career growth program with greater opportunities within the company for the employee (Mayhew).
Employees today are not willing to work for compensation alone and HRM’s are continuing to find strategic ways to keep valued and loyal employees happy when it comes to compensation and additional benefits. Employees want to feel needed and have a sense of belonging, as well as, a sense of recognition. In addition, HRM’s are constantly finding ways to lower employee retention and create a positive working environment. Also, they understand the importance of hiring selectively at the beginning; by paying employees right, offer flexible working schedules, provide comfortable working environments and culture. Without a doubt, HRM’s have a challenging role and at the end of the day they should be given the appreciation they deserve.