Advanced Remuneration and Performance †Free Samples to Students

Question: Discuss about the Advanced Remuneration and Performance. Answer: Introduction The word remuneration implies pay or compensation. Remuneration system can be defined as the system which directly affects the success of the organization. From the perspective of organizations it is a much broader term as it also includes bonuses, commissions, other payments or rewards and benefits (Bratton Gold, 2017). The purpose behind having remuneration system is to attract the top talent. As by having a competitive remuneration plan, one can attract and retain the top talent towards the organization. Here in the OMeara Electronics Company, the purpose behind new remuneration management is to have participative approach which implies the involvement of everybody in the organization. The company also want to shift from position based to person based system to retain the actual capable staff. Position based remuneration system involves the structure of positions in which roles and functions is to be defined in the organization, at the time of providing the ability to associate employees to particular positions. In position based system the position of the applicants itself become the point of determining base pay. It can be further explained as the traditional remuneration structure in which jobs are slotted into salary scales (Morris Venkatesh, 2010). The organization can track all of the weak spots in the organization by using information related to defined position. The employees log in and out of the position but the information remains as it is (constant). Under this system salary for a job is decided on the basis of its responsibilities. It has many advantages such as hierarchical organizational structure, generates the possibilities and paths for promotions. As compare to person based system, it is much simpler as the person based system involves more work to define knowledge, skills and competencies. Most of the companies would like to have position based structures. It also has some disadvantages such as it is less suitable for team based structures and incentives. The person on the job may not be capable for it. It generates the compromise of honesty in job descriptions and job valuations. Person based remuneration system Person based structure can be defined as the structure which needs proper understanding of the task and responsibilities of the jobs. To develop the person based structure one requires to know the job analysis and job descriptions. In person based remuneration system, salary and pay is to be decided on the basis of persons knowledge not on the basis of position. The difference between both the systems is that; in person based system, the organization compensates the employees on the basis of their knowledge, skills and competencies. In position based, they compensate the employees on the basis of their previous positions (job position) (Bernsten, Andersson, Gariepy, Simoens, 2010). It has many advantages such as it plays the role of an incentive for self-development. It also provides security to the employees by enhancing their skills. It reduces the need of promotion. It also has some disadvantages such as it reduces the possibilities and paths for promotions. It reduces the level of motivation for the employees as there is no scope left for growth. Basic salary can be defined as the amount to be paid to the employees after adding or deducting any extra amount. Deductions such as any extra leaves and salary sacrifice schemes and additions such as bonus, overtime, incentives and allowances. Commission can be explained as the payment given to the employees for rendering and selling the goods and services to the consumers. The payment can be calculated on the basis of the percentage of the sold goods and rendered services. Compensation can be explained as the amount of pay which is to be provided to the employees in return of some work or performance required. The pay can be in monetary or non-monetary terms. It can be further explained as the combination of the worth of the pay, bonuses, health insurance, vacation and any other incentive received by the employees for example, free lunches, parking and free events. These elements are generally involved in case of compensation. Executive compensation can be defined as the monetary or non-monetary amount received by the employees from the organization. It is the combination of salary, bonuses, shares, incentives and perquisites. This differs substantially from other ordinary pay packages for hourly workers and salaried professionals. Executive pay aims at rewarding the employee for actual results. Therefore if the employees underperform in the organization, then they will be getting the reward as per their performance (Noe, Hollenbeck, Gerhart Wright, 2003). On the contrary, if the employees meet the target as per the requirement then they will be getting higher pay as per their good performance Deferred compensation can be explained as the portion of the income of the employee which will be received by him/her after a particular period. For instance, employee stock options, pensions and retirement plans. Employee stock option can be explained as the stock option given to the employees in which the employees can have the shares at predetermined cost and can keep them for a specific period. Employee benefits are the benefits which are received by the employees in addition to their basic salary. For instance, housing facility (furnished or not), health insurance, dental insurance, life insurance, disability income protection retirement benefits and other specialized benefits (Milkovich, Newman, Milkovich, 1999). A performance linked incentive is an incentive which is totally based on the performance of the employees. It varies with the performance given by the employees. It is generally being included in the employment contract (Armstrong, 2010). Significance of remuneration system at workplace Remuneration includes financial and non-financial components. It often includes an executives basic salary and additional benefits for instance, health insurance, retirement plans and performance related bonuses. The remuneration packages that offers by the organization to the employees influence the rate of recruitment, retention and employee satisfaction. Many federal laws also influence the compensation under the remuneration system offered by the business. The owner of the organization must understand the significance of having a good remuneration system in the organization (Tzafestas, 2013). The compensation packages in the remuneration system offered by the business play significant role in the organizations capability to attract the top talent. Employees who performed well can create great impact on the competitiveness and productivity of the small business organizations. The particular factors of an attractive compensation package differ per employee. High packages may attract the top talented job candidates. From the point of view of John Rossheim of Monster.com, managers should recruit a candidate after researching about the previous salary and benefits so that they can get the idea of what is more essential for the candidate (Altbach, 2012). Compensation packages in the remuneration system often influence the motivation and job satisfaction of the employees. From the point of view of Mae Lon Ding of Personnel Systems Associates, compensation systems positively influence the performance of the large number of workers. If the employer distributes and share the profits with the employees working in the organization, the employees will feel motivated and help the organization in achieving the desired goals and objectives (Kwenin, Muathe Nzulwa, 2013). The biggest impact of funds is on the efficiency and performance in jobs. Performance is directly linked with compensation. For instance, the sales person will likely to get motivated by receiving the bonus after accomplishing the desired sales quota and it will further increase the productivity. For running a successful organization it is necessary to sustain the productive employees. Sustaining the productive employees implies less cost on training and efficient and effective workforce. Most of the employees desire for health insurance and retirement packages from their employers. To retain the employees for long period of time, the organization should offer these kinds of benefits. There are also some other ways to sustain the employees in the organization such as regular promotions, which will provide the high basic salary as well as the capability to take more of responsibilities in the organization (Epstein Buhovac, 2014) Several laws govern the compensation and wages offered to employees at small firms. The act called Fair Labour Standards governs the federal minimum wage, child labour, equal pay and overtime wages. The act called Equal Pay forbids the discrimination on gender basis. Under this act, an organization may still base compensation in the case of seniority or merit. If the organization fails to follow the laws of compensation, it will definitely result into different penalties against the organization (Gerhart Bretz 1994). Recommendation Person based system is recommended for OMeara Electronics Company as it provides several advantages to the companys remuneration system. The person based system can be defined as the system in which organization compensates the employees on the basis of their knowledge, skills and competencies. In the position based system there are many disadvantages for the organization. It is less suitable for team based structures and incentives. It may be possible that the person on the job may not be capable for it (Nankervis, Baird, Coffey Shields, 2013). It also generates the compromise of honesty in job descriptions and job valuations. Sometimes the candidates come with the fake experience as to have the high salary package in the organization but they do not have the desired knowledge for that post (Bratton Gold, 2017). In the person based system, people get employed on the basis of their knowledge and knowledge can be checked by preparing specific test paper as per the jobs. So it is mor e fair system then the position based system. Person based system is the right system for the company called OMeara Electronics as it serves many advantages to the company. It helps in recruiting the top talented staff for the company. It also plays the role of an incentive for self-development. It provides security to the employees by enhancing their skills (Armstrong, 2010). In addition to this it also reduces the need of promotion. Salary increment will be done on the basis of increase or decrease in knowledge of the person. Therefore in every way it is the fairest system for the company and employees. For example, John and Dan go for an interview. John has the experience of 2 years as junior manager in some company and Dan has excessive knowledge for the post of senior manager. As compared to John, Dan has more knowledge for the post therefore he is more capable for the job because he has excessive knowledge and he can justify the remuneration paid to him by handling the responsibilities properly (Frydman Saks, 2010). Conclusion The essay includes about the system of remuneration in the organization. Point of view of organizations has also been discussed in the essay. So from the point of view of organization remuneration is a much broader term as it includes bonuses, commissions, other payments or rewards and benefits. In this essay I have also explained two different system that are position based and person based system. Analysis of the same also has been included in the essay. In addition to this, elements of remuneration system is also explained and in the last I have recommended the person based system for OMeara Electronics Company. References Altbach, P. G. (Ed.). (2012). Paying the professoriate: A global comparison of compensation and contracts. Routledge. Armstrong, M. (2010). Armstrong's handbook of reward management practice: Improving performance through reward. Kogan Page Publishers. Bernsten, C., Andersson, K., Gariepy, Y., Simoens, S. (2010). A comparative analysis of remuneration models for pharmaceutical professional services. Health policy, 95(1), 1-9. Bratton, J., Gold, J. (2017). Human resource management: theory and practice. Palgrave. Epstein, M. J., Buhovac, A. R. (2014). Making sustainability work: Best practices in managing and measuring corporate social, environmental, and economic impacts. Berrett-Koehler Publishers. Frydman, C., Saks, R. E. (2010). Executive compensation: A new view from a long-term perspective, 19362005. The Review of Financial Studies, 23(5), 2099-2138. Gerhart, B., Bretz Jr, R. D. (1994). Employee compensation. Wiley, New York. Kwenin, D. O., Muathe, S., Nzulwa, R. (2013). The influence of employee rewards, human resource policies and job satisfaction on the retention of employees in Vodafone Ghana Limited. European Journal of Business and Management, 5(12), 13-20. Milkovich, G. T., Newman, J. M., Milkovich, C. (1999). Compensation (pp. 300-530). Burr Ridge, IL: Irwin/McGraw-Hill. Morris, M. G., Venkatesh, V. (2010). Job characteristics and job satisfaction: understanding the role of enterprise resource planning system implementation. Mis Quarterly, 143-161. Nankervis, A. R., Baird, M., Coffey, J., Shields, J. (2013). Human resource management: strategy and practice. Noe, R. A., Hollenbeck, J. R., Gerhart, B., Wright, P. M. (2003). Gaining a competitive advantage. Irwin: McGraw-Hill. Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., ... Plimmer, G. (2015). Managing Employee Performance Reward: Concepts, Practices, Strategies. Cambridge University Press. Tzafestas, S. G. (Ed.). (2013). Knowledge-based system diagnosis, supervision, and control. Springer Science Business Media.