Sample Paper on Recognizing Employee Contributions

Recognizing Employee Contributions

Employees should be recognized for their contribution in the organization in order to motivate them to work harder. Employee recognition is a form of communication where employees receive rewards to encourage them to maintain certain behavior. Rewards may not cost a fortune to the organization, but they are fundamental in reinforcing desired behaviors and prevent employees from leaving the organization. When employees are recognized for their excellent work, their satisfaction and productivity go up, and such recognition encourages them to work harder. Thus, the main aim of recognizing employees’ contribution is to enhance the value of the organization to individual employees so that they can continue working for the organization.

How HR can Determine Incentive Pay

Building an effective method of awarding incentives is not an easy thing to the human resource manager. However, in most successful organizations, jobs are split into groups, with individual positions and paying for services accomplished. Incentives are usually tied to productivity as well as business performance. Thus, the three methods that HR can determine incentive pay include

  1. Merit Pay: This type of incentive involves rating employees’ performance in a scale that range from one to five, where five is the best rating. An employee with a rating of one may not receive any benefit, but an employee scoring three out of five may get a three-quarter of what an employee scoring five would get. Merit pay can also be offered to employees as an award for the past performance. A permanent employee is entitled to a merit pay if he/she has remained in the organization for at least three years.
  2. Production Pay: To enhance employee productivity, HR managers award them certain amount of money based on every piece of work they complete. Long-term incentives that organizations award to executives become the driver to high performance and excellence in the organization (Quirk, 2012).
  3. Commissions and bonuses: HR manager can choose to offer incentive to employee, on top of their salaries, depending on the percentage of what they have sold. Commissions are usually designed in consistent to the organizational objectives. For instance, employees who depend mainly on commissions may disregard customers who do not have high probability of making a speedy purchase. Bonuses are usually offered to teams that have performed extremely well in the organization to encourage performance and teamwork.

Core Legal Requirements Affecting Employee Benefits

Most employers offer numerous benefits to their employees, but most of these benefits are subject to legal requirements. The legislative requirements depend on state or location of the business. Some of the federal laws that guide on employee benefits include:

  1. The Civil Right Act: This law emphasizes on equality in awarding of benefits to employees without discriminating them in terms of their race, color, sex, or religion.
  2. The Employee Retirement Income Security Act (ERISA): Employers are expected to adhere to the law to enable employees save funds for their retirement. The law safeguards employees and the beneficiaries of such plans. Individual rights, as well as their responsibilities, are quite essential in the management of income security system for the retirees (Moore, 2011).
  3. The Health Insurance Portability and Accountability Act (HIPAA): This Act prohibits insurers from practicing pre-existing condition exclusion, and assures employees of their security in case they change employers. The fear of losing health insurance cove, some employees may become locked to certain jobs even when they have a chance to become more productive in other places (Chute and Wunnava, 2015). Hence, HIPAA has enabled employees to enjoy the freedom of switching jobs and continue earning benefits.

Benefits Organization Should Consider Providing To Its Employees

Employee benefits are essential because they increase productivity and satisfaction in the workplace. Employees who receive benefits are assured of their safety, continuity, and protection of their family members in case of any misfortune. Apart from the compulsory benefits, some of the additional benefits that organization should offer to their employees include:

  1. Holiday pay
  2. Hazard benefits
  3. Educational assistance and scholarship funds
  4. Indirect non-financial compensation
  5. Retirement benefits

When designing benefit plans, the organizations should consider the following:

  1. The HR manager should consider the budget and strategies that the business would like to provide incentives (“Benefits and Compensation Roadmap”, 2014). Understanding the business budget and the workforce management goals that the business has set for the year can help in coming up with the appropriate benefit plan, depending on the number of employees in the organization.
  2. The HR managers should choose the benefit plans that they can stick to for a significant time. Appropriate benefit plan should depict consistency for the employees to understand how the benefit program works. Inconsistent plans are likely to create dissatisfaction among employees. Benefit programs should accommodate employee needs, in addition to enhancing the competitive nature of the business.
  3. Gathering information on what employees require is essential in the benefit plan. This concept can help the organization to plan for employees’ needs, as well as remain competitive in its line of business.
  4. Having clearly defined job groups for each department is the right foundation for determining the best benefit plan. Thus, the HR manager should establish a career framework, where each job has its scope, necessary experience, and expected outcomes. Each job should have its level of incentive to ensure fairness across the organization.

Efficiency of Techniques for Communicating Compensation and Benefits Plans to Employees

Although many employers believe that understanding the benefit plans is essential for the satisfaction of employees, many employees have low expectations concerning the employers’ capability. A well-rounded compensation plan offers the standard that organizations need to demonstrate their overall value to their stakeholders. One way that organizations utilize to communicate to employees on how they value them is in the form of total compensation statements. Employers should explain benefit plans to all employees without minding about their job level. The total compensation statement enables employees to have a full impression of the benefits then their organizations offer. Organizational culture is essential in communication, since it depicts how employees access information from their seniors.

Employers who aim to maximize the value that their employees receive in form of benefits should go beyond offering detailed information concerning the benefit plans. They should assist employees to understand what each benefit would do to their lives, in addition to advising them at a personal level (Brenner, 2009). Communicating about life occurrences, such as parenthood, illnesses, retirement, and death, can help employees to align benefits offered with their needs. The mode of communication matters because not all employees have the capacity to access computers. Communication should occur throughout the year, since the organization can recruit new employees, promote old employees, or some employees can go for retirement.

Ethical Risks of Making Incentive Pay

Incentive compensation is usually a critical issue for employers, employees, job seekers, and other stakeholders in the company. Incentive compensations are essential in retaining employees, but they tend to become manipulative, as employees may only become productive once they are assured of benefits. Ethical violations are legal, but sometimes, it becomes quite difficult to establish what is ethical while referring to incentives. Each organization has its own incentive program, thus, determining what is unethical from ethical practices would depend on the organizational culture.

Striving to meet a threshold performance may create an ethical problem to employees who may become stressed to due to underperformance. Lack of adequate research on compensation and incentive pay may create ethical risks in recognizing employee contributions. Many organizations claim that they utilize pay-for-performance form of incentive pay, but several researches have proved an existence of numerous forms of pay-for-performance, thus, creating doubts on the ethics of such plan (Gupta and Shaw, 2014). Ethical risk may also rise from unfair distribution of incentives, where it becomes easy to earn incentives from some responsibilities over others.

Handling ethical risks in incentive plans require companies to distinguish between short-term and long-term approaches to incentive compensation. Organizations should carry out research to understand the appropriate piecework that all employees are capable of achieving. Incentives should be distributed fairly to avoid ethical risks, as some employees may claim that they are never given chances to earn them. Organizations should focus on quality rather than productivity to discourage some employees from cutting corners to enhance their rewards.

Conclusion

Organizations have come up with plans to compensate their employees through incentives to enhance their productivity, satisfaction, and retain the best-qualified employees. Organizations should recognize employees by offering them attractive additional incentives; to show them how valuable they are to the organization. They should have awarded incentives based on their merit, productivity, or commission. Apart from what the federal laws command organizations to offer employees, employers should endeavor to offer additional incentives to encourage high productivity and enhance the value of their organizations. Proper communication is essential to enable employees understand what they are entitled to in a particular time and location. In addition, employers should distribute incentives fairly to avoid ethical risks.

 

References

Benefits and Compensation Roadmap. (2014). Workforce, 93(9), 28-31.

Brenner, B. K. (2009). Life-Event Segmenting Offers Optimization of Benefit Effectiveness. Journal of Financial Service Professionals, 63(3), 26-29.

Chute, B. W., & Wunnava, P. V. (2015). Is There a Link Between Employer-Provided Health Insurance and Job Mobility? Evidence from Recent Micro Data (No. 8989). Institute for the Study of Labor (IZA).

Gupta, N., & Shaw, J. D. (2014). Employee compensation: The neglected area of HRM research. Human Resource Management Review, 24(1), 1-4.

Moore, K. L. (2011). An Overview of the US Retirement Income Security System and the Principles and Values It Reflects. Comparative Labor Law & Policy Journal, 33(1), 5-48.

Quirk, W. (2012). Long-term incentive pay plans: A value option for healthcare organizations. Healthcare Financial Management, 66(9), 132-4, 136, 138 passim. Retrieved from http://search.proquest.com/docview/1111788567?accountid=1611