The level of pay that companies offer their employees is among the factors that determine the productivity and the success of the company (Martocchio, 2014). It is the desire of most companies to offer their employees competitive packages. However, despite the best efforts of these companies, they are unable to ensure that their employees are adequately compensated. These companies have been forced to change their strategies. Instead of hiring permanent employees who tend to be costlier, these companies are turning to contingency workers (Moran, 2004). Essentially, contingency employees involve such workers as contractors and consultants who are employed on a non-permanent basis. There are various legal issues that arise with regard to the hiring of contingency workers and the design of pay structures. The strategic development of benefits is the subject of this paper. This paper develops a pay structure for Capratek and offers an evaluation of strategy considerations.
Capratek pay structure
The pay structure that Capratek adopts needs to include the benefits that the law stipulates should be provided to employees. These legally required benefits typically take the form of social benefits. They are intended to safeguard the physical health and general wellbeing of employees (Martocchio, 2014). These benefits are also meant to ensure income stability for employees and their families. Paid leave is one of the benefits that are required by law and Capratek needs to include in its pay structure. There are some laws that demand that employers provide their employees with insurance and retirement benefits. Assuming that these laws apply to Capratek, the company needs to include these benefits in its structure.
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In addition to the legally mandated benefits mentioned above, Capratek needs to incorporate discretionary benefits and retirement plans into its pay structure. Paid vacation and protection programs are among the discretionary benefits that Capratek may choose to extend to its employees. Disability insurance and accommodation arrangements are other discretionary benefits (Martocchio, 2014). While it is the case that it is left to the discretion of the company to provide these benefits, it is advised that the company should ensure that its employees receive these benefits. Benefits have been shown to have a positive impact on the motivation and the productivity levels of employees (Martocchio, 2014). Capratek needs to adopt the standard retirement plans that are used by most companies in the United States. Basically, these plans define the minimum age that qualifies one to receive the benefits and the amount of compensation offered. The plans also stipulate the amount that the employer contributes to the plan and the rules and guidelines that are to be followed in the provision of retirement benefits (Martocchio, 2014). As Capratek adopts the discretionary benefits, the legally required benefits and the retirement plans, it will be moving in the right direction towards creating a motivated and productive workforce. The figure below shows the pay structure that the company needs to adopt.
| Legally required benefits | Retirement plans | Discretionary benefits |
|
Paid leave 60% of monthly pay |
60% of monthly pay. Amount to be based on number of years worked. |
Disability insurance Amount to be determined at time of disability and following consultation with insurance provider. |
|
Health insurance $700 per month |
Accommodation arrangements The amount to be determined based on assignment and position of employee in the company. |
Alignment of benefits to pay structure
In the discussion above, the pay structure that Capratek needs to adopt has been outlined. As it implements this structure, the company needs to ensure that the structure is aligned to the benefits. When one examines the pay structure and the benefits provided above, it becomes clear that they are aligned. The benefits that the company is being asked to provide to its employees are typical and inexpensive. For instance, family leave and the retirement plans that the company should make available to the employees can be implemented in phases to ensure that the company is not overwhelmed. In the unlikely event that the company finds the cost of implementing the pay structure and providing the benefits is too high, it should find comfort in the knowledge that the pay structure will guarantee optimal performance from the employees. The other issue that aligns the pay structure to the benefits is the legal provisions. The United States has developed laws that govern how employers provide their employees with benefits. Since the pay structure includes some of the legally mandated benefits, it can be argued that the structure is aligned to the benefits. In an earlier discussion, it was mentioned that companies in the United States are moving away from traditional employment structures. Instead of hiring permanent employees, the companies are opting for contingency employees. It has been shown that the cost of maintaining these employees is lower (Cappelli & Keller, 2013). The pay structure and the benefits outlined in the discussion above can apply to contingency workers as well as regular full-time permanent employees. This indicates that the pay structure is in line with the benefits since the structure can be adapted to fit different employment scenarios.
Strategy considerations
When designing their pay structure, companies need to be strategic. There are numerous considerations that they should make to ensure that the pay structure delivers a competitive advantage. One of the considerations that need to be made regards the cost of implementing the pay structure. It is important to ensure that the implementation is not too costly. Organizations should strive to minimize their cost of operations (Martocchio, 2014). This allows them to pass on the cost savings to their consumers in the form of lower product prices. This strategy consideration will enhance organizational performance.
While it is important for organizations to minimize the cost of delivering benefits, it is much more important to ensure that this does not occur at the expense of the welfare of employees. Capratek will need to see to it that its employees are adequately compensated. Adequate compensation provides employees with the drive and motivation to remain committed to their jobs. This strategic consideration will mostly boost individual performance. In addition to promoting employee engagement and motivation, providing adequate and fair compensation will also allow the company to comply with the law. There are state and federal laws that stipulate the minimum amount of wages that companies should offer their employees (Martocchio, 2014). Firms which fail to honor the provisions of these laws expose themselves to the risk of legal action. To ensure that its performance is not threatened by legal action, Capratek must comply with these laws. This will create an atmosphere that facilitates the growth and performance of the company.
Adequate compensation, employee loyalty and motivation and compliance with legal provisions are some of the rewards that the company and its employees are set to receive as rewards for the implementation of the pay structure and benefits discussed earlier. It must be remembered that these rewards will only be enjoyed if the company considers the strategic issues discussed above. In addition to the strategic considerations already mentioned, Capratek should adopt a flexible employment arrangement. Instead of relying solely on permanent employees, it should also consider employing contingency workers. These workers are easier to manage and their cost is lower. It is true that the contingency workers will pose a threat to the permanent employees at the company. However, the company should find comfort in the knowledge that the hiring of these employees will allow it to stay ahead of its competitors. Overall, the strategic considerations discussed will allow Capratek to cement its position in its industry.
In conclusion, strategic advantage is developed through different measures. Effective human resource management is one of these measures. It is important for organizations that wish to stay competitive to treat their employees fairly. Offering adequate compensation is among the measures that a company can institute as part of its human resource management policy. Retirement plans, discretionary benefits and legally required benefits are just some of the tools that can be employed with the aim of boosting employee productivity. Companies need to be strategic in how they reward their employees if they are to remain competitive.
References
Cappelli, P. H., & Keller, J. R. (2013). A study of the extent and potential causes of alternative
employment arrangements. Industrial and Labor Relations Review , 66(4), 874–901.S
Martocchio, J. J. (2014). Strategic Compensation: A Human Resource Management Approach.
New York: Pearson.
Moran, A. E. (2004). The contingent workforce: A challenge for benefits managers. Employee
Relations Law Journal , 30(3), 87–100.
