Compensations and Benefits Essay

Introduction When creating a benefit package for their organization, managers must take into consideration an array of conditions that will affect both the organization and the personnel it employs. These conditions range from external factors such as laws mandated by both local and federal agencies to internal factors such as administrative requirements, cost that stem from purchasing and maintaining equipment and employee incentives. By the end of this paper, I will explain the essential role each of these factors play in the establishment of an organization’s benefit package. External Factors One of the biggest, if not the largest, challenge an organization faces when seeking to recruit the best qualified personnel in hopes of building a workforce whose loyalty keeps them from seeking employment elsewhere is to design a benefit’s package that will adhere to all lawful mandates and is perceived as being fair by all employees. As noted by the author or our text, â€Å"companies establish strategic benefit plans on the interpretation of pertinent information in the external and internal environments. †(Martoccio, 2011, p. 19) Lawful mandates, or external factors, are important because failure to follow them will result in stiff penalties for the organization. Federal laws such as the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964, the Social Security Act and the Federal Unemployment Act were designed to ensure employees received fair treatment from employers. The Equal Pay Act (EPA) of 1963 and Title VII of the Civil Rights Act of 1964 were designed to prevent employers from discriminating against potential employees. â€Å"The EPA was specifically enacted to end gender discrimination in pay†¦the Civil Rights Act of 1964†¦makes it an unlawful employment practice for an employer to discriminate against any individual†¦because of race, color, religion, sex or national origin. † (Greenlaw & Kohl, 1994, p. 240) Two additional external factors to be taken into consideration or the Social Security Act (SSA) and the Federal Unemployment Act (FUA), both were designed to help personnel after they have been hired by an organization. The SSA provides that added security of an income to an employee upon retirement or in the event of being disabled and financial assistance to dependent survivors of a deceased employee. The FUA provides financial security to an employee who was released from his or her job due to no fault of their own. Having knowledge of these laws and being able to incorporate specifics within their benefits package will prove to be cost effective to any employer. Internal Factors While external factors are important, internal factors are just as important when designing a benefit plan for an organization. When implementing a benefit plan, managers must take into consideration any internal factors that might affect the organization administratively. Examples of administrative cost are establishing the pay structure within the organization, conducting wage surveys and implementing the wage structure for positions within the organization. According to Mr. Von Yeast, few people take into consideration the importance of administrative cost. â€Å"I have been in groups of experienced and knowledgeable administrators who give blank stares and refuse to comment on administrative cost. † (Von Yeast, 1994, p. 26) Another small, yet important internal factor that affects an organization’s benefit package are costs associated with purchasing, maintaining and eventually replacing equipment. The last internal factor I will use to support my claim that both external and internal factors must be taken into consideration when creating a benefit packet is the most important one to me and that is employee incentives. Employers that place high value on those with whom they employ stand a better chance of developing a loyal workforce who has a vested interest in the function of the company. The founders of Costo Wholesale Warehouse built their empire on this way of thinking. It’s â€Å"co-founder Jim Sinegal has told MMR in the past that the company’s generosity regarding worker pay and benefits is not just the right thing to do but also produces dividends that benefit the business. † (Costco, 2012, pg 20) Placing the needs of its employees first, hiring from within, and tuition re-imbursement are just a few of the benefits Costco offers its employees and as a result it has survived one of our nation’s worse economic crisis. Research has shown that Costco’s employee turn-over is minimal and customer satisfaction is up as a result of employees who have a vested interest in the organization. Although I believe Costco’s founder’s understood the value of people, they did not come to this conclusion on half-heartedly. Much thought and consideration must be taken when deciding what benefits should be included within a package. Conclusion Providing additional incentives such as educational benefits, health, dental, vision and life insurance along with paid vacation is beneficial to the organization as well as the employee. With hope, the employer will be happy because they would have hired a more educated worker who is skilled in his or her profession resulting in more productivity and the employee will perform better because of the promise of better job security and benefits that protect them and their families. In short a good benefit plan, that takes into consideration both external and internal factors will result in better productivity. Reference Costco Policy of Treating Workers Well Pays Off. (2012). MMR, 29(3), 20. Greenlaw, P. S. ; Kohl, J. P. (1994). Thirty Years of Civil Rights: The EPA/Title VII Sex-Based Wage Discrimination Controversy. Labor Law Journal, 45(4), 240. Martoccio, J. (2011). Employee benefits: A primer for human resource professionals.