05.Remuneration Package (RP)
Remuneration Package (RP)
RP is generally based on the award that covers the particular employee in an organization. The RP is a function of the discrepancy between what employee feels that they should get and how much pay (Lawler,1971). If a satisfactory RP is widely applied in an organization and it will improve employee’s satisfaction on the job and also change attitudes and social behavior of employees. A satisfactory remuneration strategy should be congruent with and support corporate values and beliefs, emanate from business strategy and goals, organization performance, drive and support desired behavior at all levels, fit the desired management style, provide competitive edge needed to attract and retain the high levels of skills that the organization needs and anchored to the realities of the labor market.
The structures and allocations of RP may affect the motivation of individual team members and the inclusion of RPs are central to many models of work group effectiveness (Hackman, 1990 as in Kerrin and Oliver,2001). RP includes salaries, bonuses, and medical benefits, low interest rates housing loans, vehicle and other loans. Earnings is the contractually agreed fee for a process (Cushway, 2001) between company and employee. It is the amount that the man or woman can assume to receive as a regular primary regardless of overall performance. Pay pleasure is a characteristic of the discrepancy between what one feels and need to receive and how much pay one does get hold of (Lawler, 1971). Pay delight has its foundation inside the standards of the fairness theory of motivation (Adams, 1963). Equity theory specializes in people’ emotions of how fairly they have been handled in contrast with the treatment obtained through others. One of the most popular financial benefits supplied by means of banks are the bonus and this is defined as “a sum of money added to a person’s wages for good performance. (Oxford Dictionary Thesaurus and word power Guide).
However, the bonus coverage of banks varies in line with the overall performance of average bank and the overall performance of people and corporation perceptions. Medical benefits plans & other programs conductive to maintaining a healthy work force (Roberts, 1971) Medical advantages are to offer safety in opposition to fees for the worker and his or her dependents. Loans are price range superior to providers on behalf of a worker for the functions of buying a land, production of house, purchase of a vehicle and buy of consumer goods and so forth. The organization shall get better those elements from the personnel over a period of time on a monthly foundation from the revenue at the side of a nominal interest charge. This will enable employees to personal property without paying them in advance which is practically not possible for monthly earnings earners given the escalating costs of lands, Buildings and vehicles consequently. Therefore, the available literature strongly suggests that there is a negative relationship between remuneration packages and ET.
References :
Lawler, E.E. (1971). “Pay and Organizational Effectiveness”, New York: McGraw-Hill.
Hackman, J.R. (1990). “Groups that work (and those that don’t): Creating conditions for effective team work”. San Francisco, CA: Jossey-Bass.
Kerrin M., and Oliver N, (2001). “Collective and Individual Improvement Activities; The Role of Reward System”, Personal Review MCB up Ltd.UK.
Cushway, B. (2001). “Human Resource Management”,1st edition, Rest Publishing, New Delhi.
Lawler, E.E. (1971). “Pay and Organizational Effectiveness”, New York: McGraw-Hill.
Adams, J.S. (1963). “Towards an understanding of inequity”, Journal of Abnormal and Social Psychology, Vol. 67, pp: 422-436.
Roberts S. Harold, (1971). “Roberts Dictionary of IR”, The Bureau of National Affaires, Washington.
This is very important topic for all of us, the remuneration packages, containing salaries, bonuses, medical benefits, and loans, play a pivotal role in employee satisfaction and organizational behavior. They should align with corporate values, reflect fairness, and incentivize performance. The connection between comprehensive packages and reduced employee turnover is highlighted in your literature.
ReplyDelete
DeleteThank you Dammika for the engagement. Structuring employee compensation involves setting salary ranges and pay grades based on market data and job roles. This process includes conducting a job analysis and evaluation, determining the form of your compensation structure, and planning to update pay structures.
Great breakdown of remuneration packages and their impact on employee satisfaction and I would like to make a query.
ReplyDeleteYou mentioned the negative relationship between remuneration packages and ET. How can companies mitigate this effect to ensure employee satisfaction remains high?
Dear sumeda thank you very much for your engagement & here some ways of keep high employee satisfaction.
Delete1. Offer a competitive salary
While money isn’t everything, it’s a good starting point when you’re focused on employee retention and satisfaction. In a 2015 survey, employees rated pay the second-most important factor to their job satisfaction.3
These days, it’s relatively easy for employees to do their research and find out if they could earn more working for your competitors. Don’t give them a reason to go looking! Make sure that employee compensation is competitive and that there’s a clear system in place for promotions so employees never have to wonder when their next pay increase may be on the horizon.
2. Ask for employees’ suggestions
“Don’t make the mistake of assuming you know what will make your employees happy or failing to take into account the needs of different employee groups,” Beaty says. “The employee perspective will always be different from the HR or leadership perspective.”
The solution is simple: Ask employees to share their suggestions for positive change. This is also a good place to gauge how satisfied employees currently are with their work. There are plenty of tools and surveys available that can help you gather ideas from employees quickly and easily. While not every suggestion may be feasible, this approach will at least give your organization a better handle on what is promoting—or driving down—overall employee satisfaction.
3. Be transparent
What you do with your employees’ feedback matters just as much as gathering suggestions in the first place. Taking an employee survey will seem performative if employees don’t see any of their ideas being put into place.
Beaty recommends focusing on action steps you can take to get started implementing changes and keeping employees in the loop throughout the process. “It is important to make it a continuous process with open and transparent communication on both sides.” This shows employees that you value their suggestions.
4. Get creative with benefits
Employee benefits are an often-overlooked aspect of the compensation package that can make a big difference in job satisfaction. For example, 67 percent of organizations haven’t made any changes to their family-friendly or wellness benefits in the past year, despite the fact that they’re relatively low-cost to implement and receive a lot of enthusiasm from employees.4
“When you invest in your employees’ healthcare plans, retirement packages and family-friendly benefits, they feel like you care,” says Anjela Mangrum, president of Mangrum Career Solutions. These are just a few creative benefits ideas that can help you stand out from other organizations and boost employee satisfaction:
Subsidized childcare or elder care
Options to bring your child to work if your original childcare falls through
Free credit counseling services
Onsite yoga or meditation
Paid time off for volunteering
Yes, Channa it is a tough & very important task. Some important components when designing salary packages have mentioned below,
ReplyDeleteCareer Guide (online)
When paying salaries to employees, companies generally use a salary structure to ensure fairness and compliance in compensation. It ensure pay parity between employees working in the same role and position. By understanding how employers use such a structure to organise payments, you can find the minimum and maximum earning potential for a specific job role and make better career decisions.
Basic salary:
This is a fixed, taxable amount that is 40-45% of the CTC and forms the base income of the employee before any allowances or deductions. The designation and industry primarily determine the basic salary.
Gross salary:
It is the salary amount before taxes and any deductions. It consists of the basic salary, bonus and other allowances.
Net salary:
This is also known as the take-home salary and is what an employee receives every month. The amount includes basic salary, allowances and does not include the deductions for the employee provident fund and various taxes.
Allowance:
It is a partially or fully taxable amount that an employee receives in addition to the net salary. Depending on the company's policy, employees may receive a dearness allowance (DA), house rent allowance (HRA), leave travel allowance (LTA), children education allowance, medical allowance, phone reimbursement, special allowance or allowances for car maintenance, driver salary and books and periodicals.
Bonus:
This is the fixed or variable amount that an employee may receive in recognition of their excellent work performance over and above their salary. Different companies may offer varying bonus amounts at different intervals.
Employee Provident Fund
(EPF):
This applies to companies with more than 20 employees and to employees whose basic salary, DA and special allowance are less than 15,000 a month. Employers and employees each are required to contribute 12% of the basic salary, DA and special allowance directly into the employee's EPF account every month.
Employees' State Insurance Corporation (ESIC): It is mandatory for employers with 10 or more employees who receive than 21,000 in gross salary every month. Employers are required to contribute 3.25%, and employees require contributing 0.75% of the gross salary for the ESIC.
Labour welfare fund: Employers and salaried employees are required to make contributions towards labour welfare. The contribution amount can vary from state to state.
Professional tax:
The employer deducts a professional tax at the prescribed rate from the employee's salary and pays it to the state government.
Gratuity:
Employers with ten or more employees pay a lump sum, known as gratuity, to employees retiring after working for five or more years with the company. The gratuity amount is 4.81% of the employee's basic salary.