The Compensation and Benefits Department
Agha Sadarrudin
Work in a compensation and benefits department is often described as dealing with the most objective areas of a subjective field. As the name implies, compensation and benefits is concerned with paying employees and administering their benefits package. These tasks are by no means easy ones. First of all, job salaries are not paid on a whim; rather, dollar values assigned to positions come from elaborate investigations and analyses. These investigations run the gamut of simple, logical job rankings (i.e., the position of president of a company should be paid more than the position of a maintenance engineer) to extensive analyses. Once these analyses are finished, job ratings are statistically compared to determine the relative worth of the job to the company. External factors, such as market conditions, limited supply, arid the like, may affect the overall range of job worth. Additionally, analysis is conducted to ensure that there is internal equity in the compensation system. This means that as job rates are set, they are determined on such dimensions as skill, job responsibility, effort, and accountability-not by personal characteristics that may be suspect under employment law.
On the benefits side of the equation, much change has occurred over the past decade. As benefit offerings to employees have become significantly more costly, the benefits administrator (who may also have the title of risk manager) has the responsibility of piecing together a benefits package that meets the needs of the employees, while simultaneously being cost-effective to the organization. As such, much effort is expended searching for lower-cost products, like health insurance, while concurrently maintaining or improving quality. Additionally, various new products are often reviewed, such as flexible benefits programs and utilization reviews, to help in benefit-cost containment.
On the benefits side of the equation, much change has occurred over the past decade. As benefit offerings to employees have become significantly more costly, the benefits administrator (who may also have the title of risk manager) has the responsibility of piecing together a benefits package that meets the needs of the employees, while simultaneously being cost-effective to the organization. As such, much effort is expended searching for lower-cost products, like health insurance, while concurrently maintaining or improving quality. Additionally, various new products are often reviewed, such as flexible benefits programs and utilization reviews, to help in benefit-cost containment.
The benefits administrator also serves as the resource information officer to employees regarding their benefits. Activities such as helping employees prepare for their retirement, looking for various payout options, keeping abreast of recent tax law changes, or helping executives with their perquisites, are conducted. This gives this individual a great deal of responsibility, but also high visibility in the organization.
Although I have presented four generic areas of HRM, I would be remiss not to recognize the changing nature of HRM in today's organizations. As organizations change structures (to reflect global competition and the like), there has been a movement away from centralization of functional areas toward more self-contained units. In companies where strategic business units, or market-driven units dominate, an HRM professional may be assigned to these units to handle all the HRM operations. In fact, it is estimated that on average one HRM specialist serves the needs of one hundred employees. While a headquarters HRM staff remains to coordinate the activities the HRM representative is expected to perform all the HR functions. Accordingly, the movement toward generalist positions in HRM appears to be on the rise.
Another trend is also closely aligned with the generalist-versus-specialists discussion. Thai trend is called shared services. In large companies that are geographically dispersed are finding it more cost-effective to share their HRM services among the division Under shared services, each location is staffed by a few generalists who bandit routine local matters like recruiting, policy implementation, grievances, employee training, and the like. Specialized services, like organization development and compensation and benefits are handled by a staff located at a centralized location. Each location, then, shares these services offered by the centralized unit, and uses only what is necessary for the division. As such, each location gets specialized care on an as-needed basis without the cost of having full-time staff.
Although I have presented four generic areas of HRM, I would be remiss not to recognize the changing nature of HRM in today's organizations. As organizations change structures (to reflect global competition and the like), there has been a movement away from centralization of functional areas toward more self-contained units. In companies where strategic business units, or market-driven units dominate, an HRM professional may be assigned to these units to handle all the HRM operations. In fact, it is estimated that on average one HRM specialist serves the needs of one hundred employees. While a headquarters HRM staff remains to coordinate the activities the HRM representative is expected to perform all the HR functions. Accordingly, the movement toward generalist positions in HRM appears to be on the rise.
Another trend is also closely aligned with the generalist-versus-specialists discussion. Thai trend is called shared services. In large companies that are geographically dispersed are finding it more cost-effective to share their HRM services among the division Under shared services, each location is staffed by a few generalists who bandit routine local matters like recruiting, policy implementation, grievances, employee training, and the like. Specialized services, like organization development and compensation and benefits are handled by a staff located at a centralized location. Each location, then, shares these services offered by the centralized unit, and uses only what is necessary for the division. As such, each location gets specialized care on an as-needed basis without the cost of having full-time staff.
1 comments:
In my opinion, as with other HR activities, compensation management should operate in a dynamic environment. For example, as managers strive to reward employees in a fair manner, they must consider controls over labor costs, legal issues regarding male and female wage payments, and internal pay equity concerns. Each of these concerns is highlighted in three important compensation issues:1) equal pay for comparable worth, 2)low salary budgets,3) wage rate compression.
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