Hrm 533 - Total Rewards System Proposal

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Another advantage to this total rewards strategy is the reduced costs of turnover. “According to a study by the Society for Human Resource Management, employers will need to spend the equivalent of six to nine months of an employee’s salary in order to find and train their replacement (Kantor, 2016, para. 3)“. The cost of hiring a new employee including the advertising and time which included interviewing, screening, and hiring. There is also the cost of training as well as the lost productivity to consider. It takes time for a new employee to reach the productivity levels of an existing employee. Therefore, a considerable amount of money is saved with increased retention. Greater employee satisfaction also enhances profitability because employees are focused on completing tasks instead of what they are lacking. “As a company earns more money, it can filter more money to employees through raising pay, giving employees the perception of worth and thus encouraging employee longevity and performance (Gish, 2017, para. 4).” This is also beneficial because it helps the company to keep budget in check.

Determine the key communication components of the total rewards system.

The key communication components of the total rewards system are regularity, simplicity, and solicits feedback. Employees needs to be educated about various parts of the total rewards system in order to make decisions for their lives and regular communication will help them do just that. It’s important to keep the messages simple by using words that are easily understood. Also, keep the message simple by discussing one topic at a time. Create portals that provide specific details to that employee. For example, if an email is sent out about compensation then there should be a link included in the email that will lead the employee to a compensation portal. The detail in that portal should include the employee’s salary, incentive criteria, performance criteria and benefits details. Additional information to include is to show the employee how their compensation is aligned with the company strategy. This will foster understanding and provide a place to look for frequently asked questions. Last, make sure there is a space for employees to leave feedback. Employees need to be able to reach someone for questions, whether it be their direct supervisor or an HR hotline or chat.

In creating a communication plan for the total rewards system, the audience should be considered. The same message does not have to be delivered to each level of the company because the rewards might not be the same. For example, the incentives for executives, the sales team or employees in the research and development team might be different. Therefore, the sales team won’t need details on rewards specific to research and development. However, this information can be available online via the company intranet to maintain transparency. Transparency is crucial because it breeds trust, accountability, and open dialogue. Internal communications need to consistently relay which benefits and resources are available to employees. The information included could be basic health insurance, 401K plans, company-sponsored events, off-site training opportunities, and career-building workshops. HR should use a combination of emails, chats, videos, internal blogs, or in-person team meetings spread these messages. The benefit is that the company sees huge gains by the employee that chooses to use these rewards to invest in their own personal and professional development.

Indicate your strategy for devising a competitive pay structure.

Before we get to the point of devising a pay structure a job analysis must be completed. The job analysis will identify knowledge, skills and expertise required to effectively perform job assignments, which will assist in creating a job description. It will establish criteria for selection and develop the standards for performance management. It helps HR to design objective for training and development programs. This is critical in establishing pay scales, pay increase percentages and promotions. With a job analysis, companies can ensure that job titles with similar duties and skills are paid the same so that money isn’t wasted. This is critical in establishing pay scales, pay increase percentages and promotions. Other items to be considered are seniority, cost of living, performance, changes in job scope, increases due to career development and changes in the job market and locality.

My strategy for devising a competitive pay structure begins with establishing the market position. HR needs to know if the company wants to pay exactly what the market is paying if the company should be at another percentile. Then, identify benchmark jobs in order to gain valid and reliable salary survey data. Next, gather market data in every locality the company operates, both nationally and internationally. Then, check the budget to see how money the company can allocate to the position. Build a model while trying to stay in budget and matching the target percentile. Next, review your proposed scale with upper management for approval. Finally, determine how to allocate individual increases, taking into account performance and other factors.

In developing a pay structure, it is important to keep in mind that money does not motivate all employees in the same way. “Intuitively, one would think that higher pay should produce better results, but scientific evidence indicates that the link between compensation, motivation and performance is much more complex (Chamorro-Premuzic, 2013, para. 1).” Therefore, HR should spend some time learning what motivates employees and share this information with direct supervisors. This is where work-life balance can be a money saver for employers. Giving employees the option to telework a couple of days per month can increase motivation. Bottom line, employees want to feel like they have a choice in what they're doing, that they're in some way controlling their own fate rather than having to follow a path created by others. They place a huge value on autonomy and recognition. Keep that in mind when developing pay and incentive structures.

Conclusion

A total reward system includes developing various ways to increase employee’s job satisfaction, in addition to strengthening the company’s brand with applicants. It should include more than salary and benefits, because that’s not enough to attract or retain candidates. A successful total rewards system needs to be designed to align the company’s mission, goals, and strategic plans. Employees should be able to easily see the balance in the total rewards program. The system should