Effective Salary and Benefits Scheme Helps Motivate People
Scrutinizing (going through) and approving an effective salary and benefits is a matter for management.
Formulate strategies to ensure that compensation package is relevant for the different levels of employees such as managers, executives, and staff.
It does not matter whether you have decided to call your people human resources or still use the term "personnel."
The former is more appropriate for use in human resource management, though.
Your organization, as a responsible employer, would have put in place a system under which you have carefully considered all factors and aspects of the salaries and benefits you give your people.
An effective salary and benefits package has the main aim of attracting the right people to work for you as well as motivating employees to perform better and to remain with your organization.
One of the strategies you can adopt is to provide your people enough income to pay for all the necessities of life and a bit more besides.
How do you ensure that your effective salary and benefits package is competitive and can motivate employees at every level?
Go through this to do list to see what you need to do to implement an effective salary and benefits package.
- Help your organization to formulate an effective salary and benefits policy for approval by the board of directors
- Collect all important information on your present rewards system.
- Conduct a Market Survey to find out the salary range for each equivalent position found in organizations having similarities to your organization. The pay statistics are usually presented in such a way that allows you to determine the average pay or wage. It is often stated as the median pay.
- Design a Pay System or a Pay Scale for each group of employees using the data that you have gathered.
- Ensure that every important matter in an effective salary and benefits program is not missed. For example, how will you determine the starting pay of a new employee? How much pay increase will you give when a worker is promoted? How much does this differ in the case of managers and executives? How are hazardous jobs treated?
- See to it that you make necessary changes to your reward system in response to changes within and without your organization.
- Review your pay and benefits system from time to time for effectiveness and competitiveness.
Annual Pay Increase
One of the necessary tasks you need to carry out each year is to make proposal on the quantum of annual pay increase. The amount of increase is based on many factors. One of these is how well employees have done their jobs. You can get this information from performance evaluation reports after the evaluation is done at the end of the year.
An increase in pay is a reward for a work done well.
Since the increase is based on performance it is important that the performance appraisal is conducted fairly taking into consideration only relevant factors.
After considering everything you may decide that you are not going to give any increase during a particular year. You may want to do this even if employees' performance is encouraging. Usually the reason for making this kind of decision is that you cannot afford it.
This decision has far-reaching effects. Clearly explain to everyone why this decision is taken.
Using the Right Terminology
To ensure that you have an effective salary nad benefits scheme, see to it that you use the right terms.
Some people use the words "salary (salaries)", "wages" and remuneration interchangeably. Many people agree that salary is a fixed wage received on a regular basis, say per week or per month. By this, you can determine the fixed income of an employee.
But keep in mind that "wage" is more suitable for use if the job is paid on an hourly or daily basis or by a piece of a job.
Some other people use "compensation" which is something given to compensate a person for doing some kind of job.
See the suggested definition at this LINK.
Benefits and Bonuses
Employee benefits are incentives that are non-cash in nature. Examples are medical and health benefits.
Bonuses that you pay to employees are an additional compensation over and above the fixed pay. When you pay bonus, you are
giving your employees a share in the profits made by your organization for the past year. This is not based on individual performance of employees, whether managers or staff.
This means that if, as an employer, you do not have enough cash, no bonus is paid. Based on this, it is not advisable to agree to a contractual bonus.
This is a remuneration that you can put at risk.
Does your Pay Package amount to an effective salary and benefits scheme?
A so-called good pay package may or may not amount to an effective reward scheme. Is it enough to help make enhance the image of your organization as "an employer of choice"? You need to ensure that the package can motivate employees to work well and to continue working for the organization.
It is always preferable to have a pay plan. When necessary, you can modify it after reviewing its strengths and weaknesses and taking relevant market factors into consideration.
Note: The "you" here include every executive who has some say in determining certain aspects of salary and or benefits such as Human Resource Managers or HR Heads and line managers.
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