Impact of Various Compensation Methods and Benefits Plans on Employees and Organizations, Thesis Paper Example

Schiemann reports that compensation policy and benefits affects productivity (2009). He further explains that benefit/compensation policy has a sizable positive impact on employee’s motivation, performance, turnover, and also attitudes. It is, however, important to note that benefits and compensation systems are stagnant and most of the companies’ benefit plans are outdated. Schiemann (2009) reports that employees’ needs change day by day and different employees get hired and with the advancement in IT skills, employees demand more pay and good working conditions, this makes many organizations to redesign substantially.

There are a number of state, federal, tax and also local employment laws that impact compensation. These laws define the aspects of pay, shape the general benefits plans and influence how much a person may receive in terms of pay. The Fair Labor Standards Act (FLSA) is one of the important pieces of compensation legislation. This important act has 5 major laws that govern overtime pay, minimum wage, equal pay, child labor and also recordkeeping requirement. This act is often amended over the years.

Kinne reports that the Equal Pay Act of 1963 which is FLSA’s amendment is an act that prohibits being compensated differently because of difference in gender while both the male and female work in the same office and have similar jobs (2000). This act does not however prohibit seniority systems or the systems that pay according to performance and merit systems. Consumer Credit Protection Act of 1968 often focuses on wage garnishments. Employee Retirement security Act of 1974 (ERISA) usually regulates pension programs. Old age, Survivors, Disability and Health Insurance Program (OASDHI) helps a lot of people. This act is the basis for many benefits programs; equal employment, social security, implements unemployment insurance and Medicare. Traditional compensation methods often involve set levels of pay with regular increases. This act makes employees motivated because they have confidence in their employers even when the cost of living rises or merit increases, or in cases of promotions.

Kinne (2000) reported that benefits are often important to employee’s compensation package. It has been discovered that benefits are added to monetary compensation so as to retain, motivate and attract employees. Benefits have monetary value but they are not rewards in relation to cash. An example is health care benefits because health care costs are spirally and so the benefits are very essential. Most of the benefits are nontaxable in relation to the employee and they are often deductible by most employers.

Most benefits are not a requirement by the law but are very common. These include; accident, death or dismemberment insurance, health insurance, retirement plan, holiday and vacation pay, and also sick leave. Kinne (2000) suggests that new systems of compensation are being put in use because advanced Information and Technology has helped in improving skills and increasing performance due to competition. Employees who are hardworking and committed to their work are the kinds of employees who are compensated in today’s world. Kinne (2000) makes it clear that for a company to expand employees have to be motivated and employees who are motivated work harder because they know that they are developing and growing very well while still in the company and they can achieve their goals in life.

It is clear to acknowledge the power of benefit plans and compensation in an organization. This is because employees are often attracted to companies that offer good benefits and also compensation methods. For a company to grow, it needs the best benefits plans and also compensation methods that are recent. Benefits help improve the lives of employees and it is a good thing that many companies these days offer a number of necessary benefits and also compensation to their employees.

References

Kinne, D.W. (2000). “Employee Compensation: What Gets Rewarded is What Gets Done.” Compensation and Benefits Management. Spring: Academic Press.

Schiemann A.W. (2007). Employee Motivation and reward systems. Neshanic Station, New Jersey: Sirota and Alpen Associates Inc.