Employee recognition refers to the time bound, formal or informal acknowledgment of teams or individual behaviors, outstanding effort, or business results that augment organizational values and goals, and which take place beyond normal expectations. To attain full work efficiency requires one to understand the psychology of proper recognition and the praise of good work done by others. Moreover, proper application of employee recognition principles and the ability to involve others in the spread of these standards in their working relationships results in sustainable recognition, which in turn acts as an incentive for productivity among workers. Fundamentally, appreciation is a human need. Employees usually respond to proper appreciation conveyed through the timely acknowledgment of good work. Currently, as the Human Resource (HR) Manager of an upcoming retail company, I have come to realize that the steady growth in revenues and profitability needs augmentation to ensure continued company success. Skilled productive workers usually build great foundations for companies. As such, the only method of recognizing employee contribution is through proper incentives. Therefore, this paper discusses the application of compensation and benefits plans in relation to employee productivity and general input.
Perhaps the most significant contributor to increased productivity among workers in a business setting is through incentivized pay (Rynes, Gerhart & Minette, 2004). Also known as pay-for-performance, incentive pay is typically supposed to mimic the possibility of financial reward. This prospect is what is referred to as an incentive for the worker to increase their motivation, hard work and the ability to attain ultimate positive results for the company. The theory of incentives is one of the most influential theories in the study of motivation and in it, employees are motivated to achievement out of a desire to obtain incentivized considerations. Therefore, since the power of paying incentives is evident as a catalyst to company achievements, methods of its determination are paramount. These methods of proper incentivized pay are essential and delicate, and when enforced incorrectly may lead to ethical challenges and other questionable behavior. While one may consider the potential negative effects of incentives on their company minimal, consider a scenario whereby the fire department offers incentives to its firefighters for the number of fires they put out. Such a reward may become an encouragement and a motivator for some crooked employees to turn to arson to support their bonus pay and other types of incentives. Moreover, as companies continue to strategize on ways they can pay for productivity and performance, and expand their incentive programs beyond top-level management ranks, such ethical concerns continue to bear great significance. Overall, in the company I manage, two effective methods used to determine incentive pay will take effect. These methods include the rigorous involvement of employees and the establishment of a clear link between payout and performance
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In the event that an organization is on the pathway of creating work environments that are positive, high-trust based, possess exceptional customer service, display teamwork that are collaborative in nature, have operational efficiency, and produce creative problem solvers, its leadership needs to come to terms with the ability and power of incentives (Adams & Hicks, 2000). As such, under Total Quality Management, fundamental precepts such as the involvement of employees and their subsequent empowerment act as imperative methods to determine incentive pay. Employee involvement refers to the fact that every employee is viewed as a person, an individual human being and not just a machine, and that each employee takes up the mantle of helping achieve the company goals. This method also takes into account employee suggestions and eventually such suggestions become instrumental in assuring success in determining the right incentive pay to utilize. While involvement is important, the concept of empowerment is somewhat different but equally significant. Moreover, involvement and empowerment are somewhat similar. Empowerment refers to the further supplementation of involvement, whereby, the worker realizes that the many obstacles to company goal achievement can be overcome by providing ingenious solutions to pertinent problems (Adams & Hicks, 2000). Therefore, as a method of incentive pay determination, employee involvement is highly crucial and substantial in providing notable clarifications. In the company I manage, the implementation of employee involvement will entail suggestions from few managers and employees on what the company is planning to achieve and how each incentive proposition will help in this process. Such discussions and involvements take into consideration both individuals and groups. Furthermore, incentive determination through employee involvement results in increased company performance.
Establishing a clear link between payout and performance is crucial for the proper determination of incentive pay. The fundamental goal of incentives is to change the behavior of employees and eventually increase their overall performance. A director of strategic rewards with the Watson Wyatt Worldwide in New York categorically purports that incentives have the power to allow companies to control employee behavior (Rynes, Gerhart & Minette, 2004). Therefore, if business premises fail to make this link worthwhile, they lose the power of incentives. In this method, the power of performance determination is highly detrimental in the process of establishing a worthwhile incentive program for the company. Here, the logic is that if incentives are the quintessential links, which affect behavior change or increase performance in employees, a well-stipulated link needs to be defined between the payouts and their efforts. This performance and payout relationship are significant in coming up with the right pay incentive, which translates to company productivity and overall success. While some may argue that incentive plan design should not fall within reach of human resources and compensation executives, their involvement is highly crucial and as such, all processes of employee contribution recognition. Moreover, in determining this link, the involvement of senior executives and leaders in financial groups is a way to gain a much-needed consensus on the design of the incentive plan (Rynes, Gerhart & Minette, 2004). This way, as an incentive method, its determination and implementation take into consideration individuals within and outside the company, particular groups, and the company performance based on its strategic and competitive goals.
A good example of incentives is the provision of employee benefits. Monetary incentives refer to the use of fiscal payouts to retain the best brains, and as compensation for productive work (Adams & Hicks, 2000). While employee benefits are a good way to accord incentives, benefit structures are dissimilar and are controlled through various legal requirements. By definition, employee benefits refer to the perquisites accorded as non-wage compensation to employees beyond their normal salaries or wages. Some of these benefits include health insurance, life insurance, sick leave, pensions, paid vacations, short-term and long-term disability insurance, tuition reimbursement, profit sharing, and other miscellaneous rewards. In light of this, there are core legal requirements that affect employee benefits in today’s competitive environments. Due to the variability of benefits, their treatment is different for the purpose of federal taxation. In some cases, some of these benefits are included on the gross wages of employees, while others do not appear on pay slips. In some extreme cases, there is even the utilization of benefits as effective tax shelters, and this is why legal requirements are of absolute essence in the determination of essential benefits.
The federal Employee Retirement Income Security Act (ERISA) usually sets aside minimum benefit standards for almost all private industry health and pension plans, which employers make available voluntarily. These basic benefit structures are what are being used in the company I manage. While this basic benefit structure is essential, an acute need to retain highly productive workers requires decidedly structured benefit plans. Another legal requirement and one that is mandatory is the Consolidated Omnibus Budget Reconciliation Act (COBRA), which makes it a must for insurance companies that sponsor employers with more than 20 employees to accord coverage for those employees who are terminated for a specified period, as long as he or she can pay full premiums. Furthermore, employers are not required to make available paid time off (PTO). Since rules and regulations also vary by state, the range of benefit availability is also limited by legal requirements. Among the core benefit structures that are legally required and mandated by the government include, health insurance, workers’ compensation and social security contributions.
In addition to the recommended benefit structure within companies, the ability to add the overall benefits enjoyed by proven working individuals is crucial for company success. As a human resource manager, there are four additional benefits that I recommend for this company to achieve worker productivity. First, to retain workers, the company needs to offer proper housing benefits. Here, the logic is that, while workers are sorted in terms of shelter, they are able to have a settled mind, which will, in turn, be channeled into their efficiency. Another benefit is the introduction of childcare benefits. While such a benefit might marginalize the workforce, for the sake of family and woman productivity, childcare benefits offer detrimental channels, which avail time and subsequently, this, leads to more productivity. Another benefit that is crucial as an incentive is the offering of paid vacations. I believe that offering paid vacations to workers will lead to a higher chance of retaining workers. Although some may be concerned about the cost-benefit analysis of this incentive strategy, ultimately, skilled worker prospects looking for a favorable company will consider ours. In addition, it will be able to retain workers easily once they comprehend the extent of this benefit, as it is an innately unique one, not practiced in most corporations. Lastly, I will recommend a cheap but comprehensive health insurance policy, which will cover most of the intricacies not supported by the government. According to the Affordable Care Act of 2010, the American government accords healthcare benefits to workers of different categories. While this legislation caters for almost all healthcare needs, its cost has had Americans complaining for quite a long time. Therefore, the provision of customized healthcare benefits is a powerful incentive that will result in ultimate productivity and success.
While designing benefit plans, there are significant concepts that are highly instrumental in determining the efficacy and fairness of these plans. Three relatable concepts are needed for the development of an incentive plan for this company. One is the effectiveness of evaluating strategies for these plans. Here, the evaluation should be a close reflection of employee action, effort and ultimately decisions, and should reflect overall accuracy and strength. Principally, performance evaluation on the scale of numeric and subjective performance is an essential concept that largely determines the structure of benefits plans that are advantageous (Gibbs, 2012). Second, the company must consider the determination of the various job groups to be covered under the intended benefits plan. In this company, there are a number of employees such as the active, full-time employees and their dependents, temporary employees, and part-time employees. As such, the concept of defining job groups covered and the subsequent benefits structure go hand in hand in ensuring secure employee recognition. The third and most crucial concept is that of developing the right financial strategies. In this concept, indemnity and self-insurance plans coupled with programs, ideas, and concepts in cost-saving results in appropriately structured benefit plans
After the design of a proper benefit plan, the next step is of communicating it to the appropriate workers. Currently, in America, employers are spending close to 40 percent of their entire payroll on benefits for their workers, and as such, maximum returns in value are essential and a necessity in these benefits packages. Therefore, a strategic perspective on the advantages of proper benefits communication has shifted from a business tactic to a necessary strategy for all businesses, big and small. As an employer, I appreciate and comprehend the significance of benefits provided. Therefore, employees should actually have the same perspective. However, presently, employees do not understand this. This non-sensitization of employee benefits in companies is detrimental and results in negative business practices. Hence, proper communication is of utmost imperative. Currently, the most effective technique of efficient communication is the use of technology and available internet resources. Most of the staff within the Human Resource Department work with resources that are decreasing. So, this leaves the method of using internet resources to evaluate and provide solutions to complexities of enrollment processes, benefits offering, and claim management systems. Since the internet is easily accessible, nowadays, workers can look up vital information instantaneously.
In any given society or group of people, culture plays an essential role in the process of sensitization. In a business setting, employee culture directly affects communication. Moreover, its efficacy is highly integral in communicating compensation and benefit plans. The culture within business settings determines proactive and open communications, which in turn underscores absolute communication permeability among workers in a business setting. A culture of open communication within a company results in important discussions within the employee community. Communications such as the changes effected in benefit plans, the concern of employees regarding these changes, and many more issues that are pertinent are discussed. Therefore, having the ability to affect benefit communication plans directly, culture is highly influential. Therefore, as a human resource manager, I will build a culture of constant communication encouragement in order to secure proper recognition of employee contributions through timely and applicable benefits.
Inasmuch as the making of an incentive pay is a large portion of the overall worker compensation, ethical issues may arise, which poses a huge risk to the overall functionality of the business. Workers who receive large sums of incentive pay have the ethical risk of developing heterogeneity. Heterogeneity is the quality of an individual to have a state of possessing diverse content or character (Larkin & Pierce, 2015). This form of behavior is an ethical issue since most companies require a stipulated way of conducting business. To mitigate the effect of heterogeneity, strict by-laws have to be enacted to ensure proper accountability and responsibility (Larkin & Pierce, 2015). Moreover, such legislations will bring about control among skilled employees. Another ethical issue is that of cheating and unfairness. Financial rewards often bring about perceived inequity and unfairness within the company. Such perceptions bring about unhealthy competitions, which result in unfairness and blatant cheating. To mitigate these effects in the company, an integral system based on merit, and a revamp of the payout performance scale is highly imperative.
Ultimately, recognizing employee contribution is essential in ensuring productivity and profitability in all business endeavors. While various strategies and plans of effecting compensation structures exist, the underlying success rests upon the uniqueness of each business plan. Therefore, managers and executives within corporations need to have an innate understanding of their corporations and subsequently apply the most workable compensation strategies in the process of employee recognition.
References
Adams, O., & Hicks, V. (2000). Pay and Non-Pay Incentives, Performance and Motivation Prepared for WHO’s December 2000 Global Health Workforce Strategy Group . Geneva Switzerland: World Health Organization.
Gibbs, M. (2012). Designing Incentive Plans: New Insights from Academic Research. World At Work Journal , 4 , 29-46.
Larkin, I., Pierce, L. (2015). Compensation and employee misconduct: The inseparability of productive and counterproductive behavior in firms. Palmer D, Greenwood R, Smith-Crowe K, eds . Organizational Wrongdoing (Cambridge University Press, Cambridge, MA), 1–27.
Rynes, S., Gerhart, B., & Minette, K. (2004). THE IMPORTANCE OF PAY IN EMPLOYEE MOTIVATION: DISCREPANCIES BETWEEN WHAT PEOPLE SAY AND WHAT THEY DO. Human Resource Management , 43 (4), 381–394.
