Introduction
Globalization and economy recess are forcing many companies and businesses to restructure their compensation and benefit programs. Before, certain companies had a wide array of benefits and compensation to the employees, but that changed forcing these companies to find new competitive plans to retain their employees. These changes come in many ways, regulatory policies being one of the ways. The companies base their compensation and benefit plans on the declining economy and are trying to maintain the size of staff members, benefit costs and payrolls. However, small businesses find competing with large companies quite hard due to their limited resources (Martocchio, 2011). Therefore, most businesses are opting for new compensation and benefit plans which promise them new opportunities for growth, employee recognition and flexible working hours. The new plan has the intentions of boosting the productivity of employees, retaining qualified ones, reducing employee turnover, and encouraging employee loyalty to the company. Of importance to note, is that changes in compensation and benefit plans can cause negative or positive effects on the employees’ compensation and benefit packages. The employers also get affected in one way or another when the plans change, making it necessary to look for relevant measures of solving the impacts of changed plans. Lately changes in these plans have been associated with the health insurance and pension benefits (Martocchio, 2011). Disclosure of health care reforms and pension plan fees has led to increased costs for the employer and high headaches.
Regulations affecting compensation and benefit plan
Today, small businesses are upgrading the hiring inches and talent competition in the job market is heating up. This has led to the observable changes in reward strategies particularly in the human resource and financial professional fields (Winiarskyj, 2011). Both regulatory and legislative changes have been implemented, and they require employers and employees to understand the latest pensions plan and healthcare mandates. These changes involve plans relating to non discriminations, tax credits, filing and reporting requirements and other business developments. There has been a widespread uncertainty with regards to health care reform, making it the greatest of most employees and employers concerns. The government should have a role in delivery of employee and employer- based health care concern.
Health care reforms affecting compensation and benefit plans include things like new coverage mandates, pooling, state- run health care exchange and state becoming a public insurer against the private sector. These regulatory plans are not attractive to a tax payer since they put the tax payers’ funds and income at substantial risks. Some of the changes also include penalties, rules and tax provision with regard to employee medical coverage plans. The changes affect employers significantly, and they are hence required to review their compensation and benefit plans, compliance procedures and administrative policies (Winiarskyj, 2011). The regulations also require brand new employees, achievable through retraining the existing employees particularly the human resource personnel, and issuance of new communications to employees. This is a problem to most employers because the learning curve that comes with the new regulations is extremely steep, and mistakes made in the process are often costly to the business. It is also vital to note that the regulations may apply to certain plans and not others making them quite complex (Winiarskyj, 2011). The new regulations were aimed at enabling fiduciaries to determine fees that are reasonable and spot conflicts of interest that may potentially affect businesses. However, the regulations are so complex that they pose a substantial challenge to the administrators of compensation and benefit plans.
Managing compensation and benefit plan
Compensation and benefits are prime factors necessary for the achievement of business goals and objectives. Knowing if one’s compensation and benefit plan is competitive enough in the market is often hard. It is, therefore, vital to manage the compensation and benefit plans effectively to enhance proper running of business organizations (Martocchio, 2011). This is possible through the development of appropriate compensation and benefit structures, and incentive plans to enable rewarding and retaining human capital. The companies also have to ensure compliance and internal equity with the regulations and mandates. This is possible through the assumption that the employee benefit costs can be absorbed by the new compensation and benefit plan.it is also significant to note that inequities in coverage can lead to high costs for certain employee subsets like women with children (Martocchio, 2011).
Compensation and benefit plan management help a business organization develop a model or structure that brings optimization of returns on investment made in employees. Managing the plan also involves driving the productivity of the organization to its highest points. Employees experiencing this management plan often grow as highly motivated, hence retainable in businesses. Business organizations practicing compensation and benefit plan management often conform to relevant regulations and at the same time provide necessary benefits to both employers and employees (Martocchio, 2011). There is also an increased level of consistency and fairness throughout the organization.
Economic factors and development of the plan
Several business companies are trying to keep up with the ever changing world economy. The employers are taking relevant steps to be responsible to themselves and employees, as well. Compensation and benefit plans are highly significant in retention of employee and also enhancement of economy (Ramjee, 2010). In times of challenges, companies may consider decreasing compensation and benefits in order to minimize layoff of employees. After recession, a business company may be forced to focus on cash flow sustenance while waiting for a petition to resume raising compensation and benefit packages. Developing compensation and benefit plan is influenced by the approach used in maintaining the flow of cash in times of economic recession. Robust companies having serious professional shortages are bound to experience high compensations, benefits and bonuses packages. However, during the recession, these business companies experience find coping with economy quite hard and instead of thriving the companies fight to stay afloat. Therefore, the approach used during maintenance of compensation and benefit plan is essential. The demographics of the work place during recession also influence the plan development (Ramjee, 2010). This can be seen in situations where companies tend to make decisions on high salaries with low benefits or high benefits with market rate salaries. The work place demographics often drive the decision of developing a compensation and benefit plan; for instance, young employees tend to prefer high income over benefits while those at family stages value benefits. Diverse range of employees causes much challenge on the development of compensation and benefit packages.
References
Martocchio, J. J. (2011) Employee Benefits: a primer for human resource professionals, Boston: McGraw-Hill Irwin
Ramjee, P. (2010) Economic Factors of Compensation and Benefits Packages
Available at: < http://www.ehow.com/info_8568551_economic-factors-compensation- benefits-packages.html>
Winiarskyj, L. (2011) New Laws, Regulations Affecting Compensation and Benefits Plans. CBIA News Magazine,
Available at: <http://www5.cbia.com/cbianews/>
