Managing Employee Benefits

First of all, it is important to understand what remuneration management is and what its goals are. We say that “remuneration management is connected with the strategy, policies and processes necessary to guarantee financial and non-financial means: the contribution of people to the company will not remain unmarked.” And here it is very important to realize why precisely these components are included in this concept.

Remuneration management is connected with the company’s strategy — we say, implying what can be done to encourage people in the future, in the long term, how we want to encourage them in a year, two, five. This is not just a search for ideas, but their implementation in practice.

Politics is how we want to approach the organization of bonuses. It includes how much you want to pay staff in comparison with tariffs that exist on the market, as well as which groups of workers and in accordance with which models should receive a certain salary.

The concept of remuneration is closely related to the contribution that personnel makes to the work of the company. A person is encouraged not only because he was accepted for a particular position, but also for what he has done. And the last thing I want to pay attention to in this definition: we recognize that remuneration is carried out by financial and non-financial means, and often non-financial means are more effective in terms of motivation.

Remuneration is what a person considers valuable for himself. In management, remuneration is applied for several purposes. Attracting the best staff to the organization. Firms compete in the labor market, seeking to attract the best specialists (including through effective motivation). Keeping the best employees in the organization. When the remuneration in the organization does not match what the labor market offers, employees may begin to quit. To prevent this (after all, money has been spent on training and development of employees), management should provide a competitive motivation system.

Why and how

Management of remuneration, like any other area of ​​activity in the organization, has its own goals. We can formulate them as follows:

• reward people according to the value they create. In other words, the organization must understand that employees are not only and not so much costs, but the profit they create that increases the value of the organization as a whole;
• bring remuneration in accordance with the practice and tasks of the business, as well as with the values ​​and needs of people;
• to help attract and retain the highly qualified professionals needed by the organization. If the bonus does not meet this goal, the organization is not able to compete in the market for the workers it needs, it will not survive in market conditions;
• motivate people, engage them and stimulate loyalty. This goal is very important. The involvement of personnel is becoming increasingly important, because the employee involved is a person who is interested in his work, he makes every effort to continue to work in this organization;
• create a culture of high performance. In other words, people in the company must understand the importance of their own high results, as well as the fact that these results can be achieved.

In accordance with these goals, you are building a reward system in the organization. BrainyHR has reward features, so you can freely manage your employees’ benefits program. It’s an HRM system which helps your organization in employee management.

Basis and add-in

The reward system (although we say that it consists of financial and non-financial resources) is based on the basic payment. Indeed, very few people are willing to work only “for interest”. The base payment is based on the assessment of posts. From it follows the structure of grades — the classification of various posts by category, as well as the framework in which the payment for this position can increase. Grade system is based on the analysis of the market situation. You compare market rates in different companies and decide how much you will pay for this type of work. Otherwise, the company will not be able to compete for the employees it needs.

In the base payment, we include a fairly new concept — variable payment. It depends on the performance, i.e., on the employee’s skills and his contribution to the common cause. Based on the evaluation of the employee’s position, we calculate the base salary for him. But we will pay more if it produces a certain — best — result.

In addition, the payment may depend on the length of service — that is, the number of years an employee spent in a particular position, this is also included in the concept of variable payment.

There are other components of the basic payment — preferential payments. For example, sick leave, various bonuses and benefits — for night work, call work.

Motivation not only material

In the bonus system, we include non-financial methods of promotion — gratitude, public recognition. They are a confirmation that you work well. So, in many organizations in Britain today they choose the “employee of the month”: organizations have realized that such public recognition greatly affects the employee’s desire to work better. In addition, we consider responsibility to be one of the most important forms of non-financial promotion. In other words, people perceive that they have received an important, responsible work as a reward.

I want to note several more forms of non-financial promotion — career growth, training, promotion. This set of non-financial ways of promotion is included in the concept of “reward in general.

Stimulating productive behavior. The remuneration should orient employees to the actions necessary for the organization: productivity, creativity, initiative, dedication to the company.

Control over labor costs. With a low remuneration, employees will quit; with an unreasonably high remuneration, the company may go bankrupt.

To motivate employees to more efficient activities, managers use two main types of remuneration — internal and external.

Internal remuneration provides (or does not provide) the content of the work. Its components are as follows:

• a sense of achievement;
• a sense of substance and significance of the work performed,
• self esteem;
• friendship and communication arising in the process of work;
• acceptable working conditions and accurate statement of the problem.

External compensation does not arise from the work itself, but is given by the organization. It can take the following forms:

• salary increase;
• career advancement;
• provision of symbols of official status and prestige;
• management praise and recognition;
• additional payments.

Remuneration management recommendations:

• The remuneration should be specific, based on the maximum possible information content. People should know exactly what they (or their colleagues) are encouraged for.
• Rewarding the employee, it is necessary to take into account his personal characteristics, individual needs, interests.
• The remuneration should be urgent, not delayed until the moment of summing up the work results for a month (quarter, half year, year), otherwise the severity of the moment is lost (for example, IBM President Thomas Watson Sr. wrote on the spot the best employees for the achievements he discovered, acting as a “wandering manager” during rounds of his enterprises).
• Remuneration must be achievable, it is necessary to reward subordinates for small successes.

The top management of the company should actively participate in the staff remuneration system. Then the promotion will be more meaningful for workers. Better to use unexpected and irregular rewards. They have a greater impact than expected, as they are a pleasant surprise.

Sometimes small remunerations are often more effective than large ones: large bonuses are given to few people, they discourage other employees who are offended because they believe that they also deserve encouragement.

It is necessary to reward employees so that it will be remembered for a long time.