1. Describe in detail 3–4 goals that a compensation program should attempt to achieve.
A substantial relationship takes place between compensation management and other tasks of the human resources program. For instance, in the staffing of new workers, the payment rate for jobs may upturn or constrain the supply of interviewees. If payment rates are high, creating a large pool of applicants, then the company can decide to raise their selection standards to higher better-qualified candidates. Thus, reduces employer expenses for training. When workers perform exceptionally, their performance evaluations can validate an increased amount of pay. Therefore, different organizations develop a formal program to manage compensation for employees. Employees expect systems of payment that they view as being fair as well as commensurate with their skills and anticipations. Compensation for employees incorporates all kinds of pay and rewards they receive for their job performance. Direct compensation takes account of salaries and wages, commissions and bonuses, and incentives whereas indirect benefit comprises benefits delivered by the employer and non-financial rewards such as rewarding jobs, programs of recognition, and flexible working hours.
Goal 1: Achieving Effective Utilization and Management of the Organization’s HR.
The compensation program is intended to enhance the effective application and administration of the company's human resources while leading to the general goal of the company. Thus, the compensation program should be custom-made to suit the needs of a company and its workers. Some organizations institute definite goals for their compensation program; however, official compensation goals serves as a framework for managers to make sure that salaries and benefits policies attain their intended purposes. Some common compensation policy goals include rewarding the past performance of employees, remaining viable in the labor market, upholding equity in employees' salary, motivating employees' performance for the future, maintaining the budget and appealing to new employees to reduce unwanted turnover.
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To achieve the highlighted goals, thus formal compensation policies characteristically must include the rate of payment of the company and whether it aims to be below, above or at the standard rate of the community. Besides, to achieve the goals, the policy must incorporate the ability of the program for pay to achieve employee approval to perform to the best of their capacity. Further, the administration has to include the level of compensation at which personnel can be recruited and the salary variance between more senior and new workforces. The policy should incorporate the intervals at which elevations in pay are to be established and the level to which excellence, as well as seniority, will affect the salary elevations. Nonetheless, the policy should include the payment levels required to ease the accomplishment of robust fiscal position in association with the products and services provided.
Goal 2: Achieving the Performance Standards
Organizations are setting compensation goals founded on pay-for-performance standards to raise their productivity while lowering the cost of labor in today's competitive economic setting. Thus, managers are obliged to incorporate some reward to employees' efforts and performance to boost their performance standards which results in lower wage costs to the organization. Pay-for-performance is a broad range of compensation choices such as merit pay, incentive pay, cash bonuses and other many benefit sharing plans. Each of the compensation frameworks seeks to distinguish between the pay of outstanding and average performers. However, to design employee pay-for-performance framework is a difficult task as considerations must be given on how the performance of employees will be measured, how the money to be rewarded increases, the payout system, the employee to be covered and the periods when rewards will be made. Moreover, a critical problem is based on the monetary increase as well as its perceived value to the employee.
Goal 3: Achieving the Motivation Value of Compensation
Pay incorporates a quantitative measure of a worker's comparable worth. In consideration of employees, payment has a direct bearing on both their living standards and the status and recognition they can achieve both off and on the job (Shahzadi, Javed, Pirzada, Nasreen, & Khanam, 2014). As pay is a representation of the reward gained in exchange for the contributions of the employee, it is essential that the remuneration be equitable relative to the inputs and concerning what other workers are receiving for their contributions (Aslam, Ghaffar, Talha, & Mushtaq, 2015).
2. Explain and discuss some of the unique dilemmas healthcare organizations face when creating a compensation system
Some of the exceptional predicaments healthcare establishments face when crafting a compensation structure includes aligning compensation with the objectives of the business and its people costs. The economic activities have conveyed some many hurting lessons about the management of expenditures. One most critical element of the balance entails, if not the most important of the healthcare assets, its people ( Nguyen et al., 2015 ). As economy recovers, it is more vital to manage individuals with a holistic approach to complete compensation based on incentive opportunities, base pay, retirement packages and health benefits. When healthcare organizations are faced with difficult choices, they focus on one specific facet of a total analysis. Even though the approach may lead to some short-term benefits, it is likely to affect overall compensation in a negative way (Enthoven, 2016).
Healthcare establishments must react to the numerous encounters while focused on handling total compensation packages such as increasing benefits and the cost of healthcare. Besides, healthcare organizations must respond to constraints of financial management, the district benefit needs including physicians, executives, and nurses. Also, healthcare organizations are faced with attracting, retaining and engaging all employees as well as maintaining a total competitive compensation alongside benefits programs. Amidst all the dilemmas, the organization must focus on the strategy to address its people expenditures by acknowledging every feature of total compensation against conclusions aimed at one area. Thus, healthcare establishments are now necessitated to focus transformations in their programs of compensation from many occurring trends such as staff reduction and commitment to hiring people who do not smoke (Enthoven, 2016). Nevertheless, healthcare organizations must consider fresh medical students who are deciding on primary care fields against specialty fields and evolution of physicians from private practice to the part-time or full-time occupation.
3. Describe the systematic approach healthcare organizations may use to determine the monetary value of a job
Some of the conventional approaches a healthcare establishment may apply to determine the financial value of the job include taking inventory (Eijkenaar, 2013). As the first step, decision makers should understand the census of their current employee and retiree. It's also important to assess the demographics of the current retirees which are essential in determining various elements of costs. Thus, with all the information decision makers can review every aspect of total compensation (Aslam et al., 2015).
Healthcare organization may also use base compensation which is dedicated on how reimbursement relates to the practices of the market. Base compensation is intended to concentrate more on performance as well as future opportunity. Thus, if an employee performs well, is there a likelihood that their next career progression and what are their upside opportunities for compensation. In this case, pay grades are assessed and improved as required to align with the frameworks of business and processes better. The approach will allow nurses to upsurge their base remuneration with an inducement to single out themselves from others making them advance within the sector of nursing. The strategy can be achieved through further education and passing of the exams of the board. Though, every employee's base reimbursement standard must not correspond to the model but concentrate on how to apply inadequate resources. During adjustments, pay grades are increased periodically, and it does not mean an automatic change to compensation.
Another approach includes incentive opportunity which is either short or long term. Intermediate inducement opportunities must be upheld in the good and bad moments. In case base reimbursement increases are lower, more reimbursement opportunities should be moved to inducements. Thus, the programs should focus on healthcare facility outcomes as well as other features that are within a person's control. During difficult moments, incentive plans can be canceled and deemed unattainable.
Longstanding inducement programs should be restricted to a selected team of key professionals who are capable of driving long-term performance of the organization. There should be clear and comprehensive performance constructs and benchmarks for the success of this approach.
Health benefits are another approach to decide the monetary value of healthcare employment. The health benefits should be divided into two areas including active and retirees as they play a role in attracting and retaining employees. The concern is not all about high-quality health care accessibility, but being in a position to apply the approach at a realistic expense of the employees as well as retirees. Active benefits involve balancing a stable and unrivaled program of cost-effective standards for both employers and employees. The program consists of establishing the main program that manifests the establishment's commitment to health care that is rational and competitive. Also, it involves providing alternative plans that allow personnel the choice of trading down or buying up and appreciating the true drivers of healthcare costs and strive to address plan strategies to contain the areas. According to Topa, Lunceford, and Boyatzis, (2017), once a worker retires, the establishment should sustain a hands-on attitude to manage the plans successfully. Health organizations should not strive to cut the benefits, but just like the current benefits focus on the same interests.
Other systematic approaches healthcare establishments may apply to define the monetary value of an employment include retirement benefits with defined plans for benefits. Also, ancillary benefits which give the employee a piece of mind and the required coverage alongside support to assist them through the unanticipated and trying moments in their lives plays a major role in determining the monetary value of the job. Lastly, total compensation strategy is vital in managing people costs founded on a comprehensive and thorough analysis.
References
Aslam, A., Ghaffar, A., Talha, T., & Mushtaq, H. (2015). Impact of compensation and reward system on the performance of an organization: An empirical study on banking sector of Pakistan. European Journal of Business and Social Sciences , 4 (8), 319-325.
Eijkenaar, F. (2013). Key issues in the design of pay for performance programs. The European Journal of Health Economics , 14 (1), 117-131.
Enthoven, A. C. (2016). What is an integrated health care financing and delivery system (IDS)? And what must would-be IDS accomplish to become competitive with them. Health Econ Outcome Res Open Access , 2 (115), 2.
Shahzadi, I., Javed, A., Pirzada, S. S., Nasreen, S., & Khanam, F. (2014). Impact of employee motivation on employee performance. European Journal of Business and Management , 6 (23), 159-166.
Topa, G., Lunceford, G., & Boyatzis, R. E. D. (2017). Financial planning for retirement: A psychosocial perspective. Frontiers in Psychology , 8 , 2338.
