Compensation and Benefits Strategies Recommendations Essay Sample
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- Category: wage
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Compensation and Benefits Strategies Recommendations Essay Sample
One of the most important elements that stood out is Ms. Luther’s commercial construction business is expanding from its base of operations in Detroit, Michigan into a new market, Arizona. Clapton Commercial Construction has a ten million dollar annual net revenue along with an expected growth of twenty percent in their workforce with a consistent three percent drop in revenue growth this year. In order to provide Ms. Luther with recommendations for pay and benefits, we will provide a market evaluation of Arizona, recommendations for compensation structure and position in the market, develop a total compensation and benefits strategy, an overview of incentive programs, and laws related to the benefits. Market Evaluation
Arizona has a growing industry population in commercial construction. In 2013, the commercial construction sector had over 35 billion dollars in commercial construction projects in Arizona. Although the commercial construction market is vigorous in the state of Arizona, they offer some of the lowest costs of business in the nation (Reed Construction Data, 2013). The high demand for construction workers causes an increase the competition of hiring skilled workers. When inquiring about potential employment most people review the perspective of the total compensation package offered by the organization. Wages are most prevalent however wages do not make up the total compensation package. The mean hourly wage for construction occupations in 2012 was $19.10 per hour. The average hourly wage for first line construction supervisors is $29 and general construction laborers, $13.91, compared to the national average of $14.42 during the same period (Construction Arizona, 2012).
During a market evaluation of the commercial construction companies located in Arizona it was found that most companies offer: Safety bonuses, competitive pay rates, 50-70 hours per week, long-term work, completion bonuses, local & travel expenses, paid vacation, major medical and dental insurance coverage. By offering the benefits listed above it will ensure the organization attraction to quality employees with more experience. Also providing rewards for performance encourages the employee to strive for higher production. Benefits offered by a company are not mandatory and should be viewed as an advantage in addition to the wages paid by the employer (Cascio, 2013). Compensation structure recommendation
The recommended structure of pay is the customary job-based compensation model, it includes the pay system mechanics: a written and up-to-date job description for each position that the company has. This is an important tool in the designed pay system, it identifies important characteristics for each position so that each characteristic can be, defined, and weight with compensable factors (Cascio, 2013). Job interviewing, background checks, experience, and evaluations are a process in order to qualify for jobs and see what requirements an employee needs in order to get the position he/she ranks at.
With an evaluation, an employer can see the importance it is to the employee to be part of the company. It also supports the organization structure and pay differences between jobs, ranging from managers at the top to junior, entry-level employees at the bottom. Position of hierarchy is determined by the weight factor (Cascio, 2013). External survey to identify pay rates in relevant labor markets. Relevant labor market would include direct competitors operating in the same or similar business environment and location (Cascio, 2013). An employer would total the point awarded for each position during the job evaluation process, and use point totals to establish pay grades relevant to job positions. A dollar value should be assigned to each job position in the hierarchy.
Position in the market recommendation
When looking at where the company is positioned in the market, it is almost a must consider what main competitors there are in the area. Once the company is completed, then they must see who and which competitors are there locally or temporary while finishing an out-of-city job. When there is competition in the market, it is also good to look at what employees are fit for the type of employment and which ones are not capable to handle the work and everything that comes with it, such as, pressure, stress, last minute changes, and pay. Clapton Commercial Constructions biggest competitor is a company called Kitchell, located in Phoenix, AZ. This competitor is an enormous company with different offices and locations. It is recommended that Clapton Commercial Constructions offer excellent, beneficial, and financial benefits packages in order to keep well-experienced employees and for them not to join a competitor. Being that Clapton Commercial Constructions will be new to the state, at first it will be hard to gain customers but once the company receives recognition they will work their way up to being a fruitful and competitive company. Total compensation and benefits strategy
Clapton Commercial Construction must remain competitive in their compensation and benefits strategy to attract new employees as well as preserve existing employees. Such things as “pay scales, reward programs, benefits packages, company perks, allow a business to compete in the market for best employees in the industry (Lister, n.d.). It will be up to the HRM department to conduct pay salary surveys in areas of business and be competitive in their pay scales. These surveys or scales should be reviewed annually to adjust for any necessary changes. According to the budget information received from Marylee the revenue will stay the same as well as the -3% revenue growth, therefore it is essential for Clapton will have to remain within in the their boundaries to remain in business. Organizations are only as successful as their approach to hiring the right people, setting clear expectations, managing performance and recognizing and rewarding employees for a job well done (Lotich, 2015). Use of performance incentives and merit pay
Incentives can inspire individuals to perform at their best. Incentive plans should also link with the organization’s goals. Pay incentives can foster the creativity in employees to arrive at new ways of doing business, thinking outside of the box, at reduced costs and safer techniques. According to Tess Taylor, an employer benefits expert, “80 percent of employees who feel recognized for their efforts remain loyal to the organization for longer periods of time.” and “78 percent of employees said that would actually work harder if they were recognized by their employees on a regular basis. (Taylor, 2015). By including an incentive plan Clapton can possibly achieve their goals and at the same time make their employees happy and excited to work for them. Laws related to benefits and pay program
There are more than 180 federal laws that cover workplace activities for millions of employers and their workers. The United States Department of Labor website provides listings of these laws and brief summaries about them (United States Department of Labor, n.d.). The below laws are only a brief synopsis of the most relevant benefit and pay laws for the state of Arizona. Federal labor laws should be periodically reviewed to ensure compliance. The Fair Labor Standards Act (FLSA) is a law that requires employers to pay their employees at least the federal minimum wage. This law also outlines the minimum age that employees may be for certain jobs or industries.
In 2006, Arizona established a mandatory state minimum wage based on the states cost of living. This state law created fewer exceptions to the minimum wage than those established by FLSA (“Arizona State Senate”, 2013). Arizona also has their own Employment Protection Act established in 1996. This law puts into place at-will doctrine. Employment relationships are to be contractual in nature and sets into law specifics for claiming wrongful termination by an employee (“Arizona State Senate”, 2013). The above information in regards to relevant employment laws for the state of Arizona may differ from the Michigan laws. Conclusion
Expanding the business can be a risky endeavor and one of the first steps is to complete a market evaluation of the new market as well as gaining an understanding of the competitors to offer competitive packages to entice workers to work for the company. The recommended structure of pay is the customary job-based compensation model as it includes the pay-system mechanics along with a competitive total compensation and benefits strategy to obtain and retain top talent in the area supported by a performance incentive pay. Other than nationally enforced laws, the states have their own laws to be aware of such as Employment Protection Act established in 1996 for Arizona. Following these recommendations should lead to a successful expansion and benefits package that Ms. Luther is looking for.
Arizona State Senate. (2013). Labor Employment Laws. Retrieved from http://www.azleg.gov/briefs/Senate/LABOR%20EMPLOYMENT%20LAWS.pdf Cascio, W. (2013). Managing human resources: Productivity, quality of work life, profits (9th ed.). New York, NY: McGraw-Hill/Irwin Construction Arizona. (2012). Occupational Employment Statistics (OES). Retrieved from http://www.workforce.az.gov/wage-data.aspx Kitchell, Together Building Value Everyday. (2011). Retrieved from http://www.kitchell.com/ Lister, J. (n.d. ). Strategic Plan for Employee Compensation and Benefits. Retrieved from http://smallbusiness.chron.com/strategic-plan-employee-compensation-benefits-15613.html Lotich, P. (2015). 7 Things to Consider When Developing a Compensation Strategy. Retrieved from http://thethrivingsmallbusiness.com/compensation-strategy-7-things-to-consider-when-developing-a-compensation-strategy/ Reed Construction Data. (2013). Arizona Construction Information. Retrieved from http://www.reedconstructiondata.com/regions/arizona/ Taylor, T. (2015). Employee Performance Incentive and Reward Programs. Retrieved from http://employeebenefits.about.com/od/compensationpackages/fl/Employee-Performance-Incentive-and-Reward-Programs.htm United States Department of Labor. (n.d.). Summary of the Major Laws of the Department of Labor. Retrieved from http://www.dol.gov/opa/aboutdol/lawsprog.htm