COMPENSATION AND BENEFITS PACKAGE
Introduction
Java Corp. is opening a new office in London, England. As the new Human Resource manager, I’m planning to fill one of the top executive positions with a US citizen who is not employed by Java Corp. I have to formulate a preliminary compensation package for this position opening.
London is known for its expensive lifestyle. It is ranked the 30th according to the economist report done in the year 2018. Currently, the average salary in London is £37k or $347.86. The average price for property in London is £595,443 or $736,607.65 in June 2020. In June 2017, a report from the Daily Telegraph stated that the average monthly rent for a one-bedroom flat in central London was around £1,250 or $ 1,644. The prices for renting houses begin to depreciate when one is moving away from central London. The cost of living is very expensive and should be considered when preparing the compensation and benefits package for Java Corp. job opening in London, England.
Compensation is the grouping of benefits, earnings that an employee gets for the reward of labor. Compensation may be in form of bonus payments, incentives, hourly, monthly or annual salary, and benefits like health care coverage, short term disability insurance, long term disability insurance, and aids to a retirement savings account (Ensher, Crocitto, & Renard, 2018). There are numerous components that make up the total compensation package. An employee compensation plan simply means all the components plus the terms of payment and the main reason why the employee is receiving an increase in salary, incentives, and bonuses.
At the top executive position, the pay scale mostly depends on the particular person, experience, and job. Payscale may be critically different depending on the requirements of the company and the strengths and weaknesses of the person. A basic compensation and benefits package is comprised of base pay, long term incentives, short term incentives, privileges, and benefits (Kadir, AlHosani, & Fadillah Ismail, 2019). Most of the executive workers usually receive additional compensations and benefits such as a special retirement plan, a deferred compensation plan, insurance coverage, club memberships, holidays, vacation, company cars and planes, financial and legal counseling, and many others. These and many other additional benefits are to be considered when formulating the compensation and benefits package.
To determine the correct compensation and benefits package, there are a couple of questions to be answered. They include; what are the anticipations of the CEO, the market value of the experience and talent that the CEO has, what can Java Corp. can afford and willingly pay for, the philosophy on the matter of compensation and lastly, due to opening of Java Corp in London, is there any cost of living expenses to be included. When all these questions are answered, it will mark a start point for preparing a better compensation and benefits package and I will be capable of adjusting the package to the new position and any employee who will be signed.
In addition to the payments of taxes by the employees and offering leave, employees are offered benefits as required by the federal law. The benefits include unemployment insurance, workers’ compensation insurance, family, and medical leave. Workers who may have lost their jobs because of the downsizing of the company, restructuring or shutting down are eligible for applying for unemployment. The employee will be receiving half of the pay for up to twenty-six weeks. Workers’ compensation is offering protection financially to the respective employees that are suffering from illness or injury while on duty, leading to their need for medical care or missing out of work. Workers’ compensation compensates the employees for the medical expenses and loss of pay. The Family and Medical Act makes sure that the employees are balancing their family and work duties. This act gives the employees permission of taking unpaid, job-protected leave for critical medical or family reasons and the befits of group health are preserved.
Relocation should be considered into the compensation and benefits package. Java Corp will have to make some payment to cater for expenses incurred when an employee moves with their family to settle near the working area. This is done by giving a huge amount to settle for all the expenses. The expenses should comprise both selling and buying of the old and new home of the employee respectively and also assist transport, paying for the hotel before relocating to the new homestead. A time limit of thirty days will be set to cover for the above expenses. There are strategies implemented to assist the employee with the work visas to pass through the borders easily with no complications and domestic documentation such as domestic driver’s license and social security. There are policies developed to address any possible harassment of the employee for the provision of support to them
Overseas jobs always fail just because the employees and their families are not prepared for life abroad. To overcome this situation, we have approaches put in place to prepare and support the employee and their families before moving abroad. Support is offered to the employees and their families by providing cultural training. Cultural training teaches people how to survive cultural difficulties in a different setting and helps to avoid an expensive unsuccessful task.
The compensation and benefits package should include group health-care benefits (Hayes, Noseworthy, & Farrugia, 2020). Group health coverage includes additional coverage for vision care, life insurance, dental, and programs for retirement like 401K and IRA (2020). In addition to these, short term disability insurance and long-term disability insurance are also added to the total compensation of the employee. The compensation plan could also include incentives such as health saving plans and food allowance. The package should include a short holiday and vacation time for the employees to fit in the top executive position. It should consist of sick days, family leave days, bereavement days, compensation time, holidays, and vacations.
An increase in salary is commonly driven by the performance management system of the employer (Cappelli, & Tavis, 2016). Most of the incentives and bonuses given in these top executive positions are dependent on the improvement of the company productivity or value of the share that the company has (2016). Short term incentives can be in terms of cash or stock options for the attainment of specific objectives that can be achieved during the dependency of the calendar year. The short-term incentives could be part of the specific, measurable, attainable, reasonable, and constrained by time (SMART) goal program. If the organization can meet these goals, the short-term incentives will be paid out. This acts as an incentive for the employee and the company.
Conclusion
As Java Corp. is opening a new office in London, England, the compensation and benefits package will follow the above format. A competitive package should be prepared to assist the company to hire the correct competent individual for the job available and offers a smooth transition for any new candidate. It will also assist the company to meet its targets and objectives.
Reference
Cappelli, P., & Tavis, A. (2016). The performance management revolution. Harvard Business Review, 94(10), 58-67.
Ensher, E. A., Crocitto, M., & Renard, M. (2018). Compensation and benefits. In Teaching Human Resource Management. Edward Elgar Publishing.
Hayes, S. N., Noseworthy, J. H., & Farrugia, G. (2020, January). A structured compensation plan results in equitable physician compensation: a single-center analysis. In Mayo Clinic Proceedings (Vol. 95, No. 1, pp. 35-43). Elsevier.
Kadir, A. A., AlHosani, A. A. H. H., & Fadillah Ismail, N. (2019). The Effect of Compensation and Benefits Towards Employee Performance.