EMPLOYEE COMPENSATION, Three Simple Rules for Establishing Effective and Rational Compensation Plans
By Richard Hoag
No workplace issue is more important and more polarizing than compensation. When done well, a compensation plan can be motivating, energizing, and a driving force in the success of the organization. On the other hand, when done poorly, it can be deflating, de-motivating, and have a crippling effect on every aspect of the organization.
Companies spend tens of thousands of dollars on consultants and elaborate compensation plans, bonus and commission structuring, and still end up with disgruntled employees, sub-par performers, retention issues and difficulty recruiting competitive talent.
If you don't have thousands of dollars to burn on someone else's "take" on how you should compensate the people in your organization, you might want to use these Three Simple Rules:
1. Your compensation must be FAIR; fair to all affected parties.
2. Your compensation must be JUST. It must do justice to the organization and its vision and goals, and it must be justified by the performances rendered by the employees.
3. Your compensation must be EQUITABLE. It must provide equal pay for equal responsibilities and equal pay for equal performance.
1. Your compensation must be FAIR; fair to all affected parties. That means, it must be fair to the organization and its stakeholders as well as the employee. So what is fair? It is easier to measure fair, than you might initially believe.
What is fair to the stakeholders? Try this test:
Will the compensation plan, when installed, give the organization a strong opportunity to be profitable?
Will the compensation plan, when installed, give the organization a strong opportunity to be profitable?
Compensation plans that provide automatic bonuses to employees, even in years when the organization is not profitable, are NOT fair to the organization or its stakeholders.
What is fair to the employee? Try this test:
Will the compensation plan give the employee a strong opportunity to make a wage competitive in your industry for the tasks and responsibilities required?
Will the compensation plan give the employee a strong opportunity to make a wage competitive in your industry for the tasks and responsibilities required?
Compensation packages that do not meet the test standards will not attract, motivate, or retain good people.
What is fair to the organization, its mission and core values? Try this test:
Will the compensation plan overcompensate the insider few at the expense of a livable wage for the many?
Will the compensation plan overcompensate the insider few at the expense of a livable wage for the many?
An unjustified top-heavy compensation plan creates animosity, disloyalty and results in a dysfunctional unsustainable organization.
FAIR is fair, it's not hard to discern, it's simple.
2. Your compensation must be JUST. It must do justice to the organization and its vision and goals, and it must be justified by the performances rendered by the employees.
Does the compensation plan do justice to the organization? Try this test:
Will this compensation plan allow the organization to meet its short term financial requirements, achieve its long term financial goals, and ultimately grow into the vision of its leaders?
Will this compensation plan allow the organization to meet its short term financial requirements, achieve its long term financial goals, and ultimately grow into the vision of its leaders?
A compensation plan that consumes a disproportionate share of the revenue or rapidly depletes the value of the stakeholder's equity, can destroy the fundamental motivations of the leaders and hinder the organization's ability to reach its potential.
Some equity participation, in place of cash compensation, can encourage loyalty and a "big picture" mentality in key employees. This will, in turn, produce a sustainable business model for the organization.
Does the employee's performance justify the level of compensation paid? Try this test:
Will the organization receive a reasonable return on its investment ("ROI") in each employee?
Will the organization receive a reasonable return on its investment ("ROI") in each employee?
To insure that there is a reasonable ROI a portion of the compensation should be incentive driven whenever feasible and the employee's performance should be benchmarked and measured against objective criteria quarterly.
3. Your compensation must be EQUITABLE. It must provide equal pay for equal responsibilities and equal pay for equal performance. Nothing is more demoralizing than allowing inequities in your compensation plan and if those inequities happen to reflect gender, age, race, or religious preferences, that could result I serious legal problems for the organization.
Do you have reasonably detailed job descriptions and categories to differentiate compensation levels? If so, make sure that the amount of compensation is equal for all within the job description or category or that any differentiation is clearly warranted by different tasks or documented lesser or extra performance.
Formally re-assess the relationship between the employee's responsibilities and performance at least semi-annually and adjust for increases and decreases at least annually. When someone is under-performing, but you want to retain them, it is better to re-define their role, and/or reduce their compensation to correspond to their performance, than to allow an obvious inequity to continue. You may not notice the disparities, but other employees will.
The key to an equitable compensation plan is frequent and objective measurement of the employee's contribution to the organization based on objectively measurable standards and equal pay for all those who meet those standards.
The Effects of Compensation on Employees Work Performance
By Naila Iqbal
HRM strives to achieve organizational goals and the goals of employees through effective personnel programs policies and procedures. Successful performances of the personnel function can greatly enhance the bottom line of any organization. The personnel practitioners however are challenged more today than at any time in the history by a changing and more demanding labor force that has high expectation about the work place. At the same time, rapidly advancing technologies and outside influences are changing the nature of our jobs. It is thus more critical and more difficult to maintain a work environment that motivates and satisfies Human Resources.
Edward flippo states: "personnel management is the planning, organizing, directing and controlling of the procurement, development compensation, integration, maintenance and separation of human resources to the end that individual, organizational and societal objectives are accomplished."
According to Wayne. F. Cascio "Compensation which includes direct cash payment, indirect payments in the form of employee benefits and incentives to motivate employees to strive for higher levels of productivity is a critical component of the employment relationship. Compensation affected by forces as diverse as labor market factors. Collective bargaining, government legislation and top management philosophy regarding pay and benefits"
Edward flippo states: "personnel management is the planning, organizing, directing and controlling of the procurement, development compensation, integration, maintenance and separation of human resources to the end that individual, organizational and societal objectives are accomplished."
According to Wayne. F. Cascio "Compensation which includes direct cash payment, indirect payments in the form of employee benefits and incentives to motivate employees to strive for higher levels of productivity is a critical component of the employment relationship. Compensation affected by forces as diverse as labor market factors. Collective bargaining, government legislation and top management philosophy regarding pay and benefits"
Compensation may be defined as money received for the performance of work plus many kind of benefits and services that organizations provide their employee.
Compensation is recompense, reward, wage or salary given by an organization to persons or a group of persons in return to a work done, services rendered, or a contribution made towards the accomplishment of organizational goals. Wage, dearness allowance, bonus and other allowance are examples of monetary compensation, while good accommodation, children education, transport facilities, subsidized ration of essential commodities, etc. come under non-monetary compensation. In short, wage paid to collar workers or salaries paid to white collar employee can be classified as compensation.
A good compensation package is a good motivator. Hence, the primary responsibility of the HR manager is to ensure that the company's employees are well paid.
OBJECTIVES OF COMPENSATION:
To attract capable applicants. To retain current employee so that they don't quit. The employee is motivated for better performance. Reward desired behavior. To ensure equity. To control cost.Facilitate easy understanding by all i.e. employee operating manager and HR personnel
BASIC COMPENSATION
WAGE:
The remuneration paid, for the service of labour in production, periodically to an employee/worker. Wages means any economic compensation paid by the employer under some contract to his workers for the services rendered by them. Usually refer to the hourly rate paid to such groups as production and maintenance employees' wages include family allowance, relief, pay, financial support etc.
WAGE:
The remuneration paid, for the service of labour in production, periodically to an employee/worker. Wages means any economic compensation paid by the employer under some contract to his workers for the services rendered by them. Usually refer to the hourly rate paid to such groups as production and maintenance employees' wages include family allowance, relief, pay, financial support etc.
SALARY:
Salary is influenced by the size of a company by the specific industry, and in part by the contribution of the incumbent to the process of decision-making. Salary refers to the weekly or monthly rates paid to clerical, administrative and professional employees. Salary is determined by mutual agreement between the individual and the employer.
Salary is influenced by the size of a company by the specific industry, and in part by the contribution of the incumbent to the process of decision-making. Salary refers to the weekly or monthly rates paid to clerical, administrative and professional employees. Salary is determined by mutual agreement between the individual and the employer.
INCENTIVE:
An incentive scheme is a plan or programs to motivate industries or group performance. An incentive program is most frequently built on monetary, but may also include a variety of non- monetary rewards or prizes.
An incentive scheme is a plan or programs to motivate industries or group performance. An incentive program is most frequently built on monetary, but may also include a variety of non- monetary rewards or prizes.
DETERMINATS
The effective use of incentives depends on three variables. They are:
1. The individual.
2. The work situation.
3. The incentive plan.
The effective use of incentives depends on three variables. They are:
1. The individual.
2. The work situation.
3. The incentive plan.
Factors influencing compensation:
1. Organization's capacity to pay
2. Prevailing pay and benefits in the industry:
3. Compensation in the industry and availability of special competent personnel
4. Flexibility, i.e. kind of competencies and abilities in managers:
5. Performance/productivity/responsibilities of individual.
6. Organization philosophy such as to be leader or pay prevailing rates.
7. Qualifications and relevant experience.
8. Stability of employment and advancement opportunities.
"Compensation literally means to counterbalance to offset, and to make up for. It implies an exchange. Compensation translates into different meaning among countries and even overtime".
1. Organization's capacity to pay
2. Prevailing pay and benefits in the industry:
3. Compensation in the industry and availability of special competent personnel
4. Flexibility, i.e. kind of competencies and abilities in managers:
5. Performance/productivity/responsibilities of individual.
6. Organization philosophy such as to be leader or pay prevailing rates.
7. Qualifications and relevant experience.
8. Stability of employment and advancement opportunities.
"Compensation literally means to counterbalance to offset, and to make up for. It implies an exchange. Compensation translates into different meaning among countries and even overtime".
Society View:
According to G.T Milkovich and bloom "perception of compensation differ within countries as well. Some in society may see pay difference as a measure of justice.
Stockholder View:
To stockholder, executive's pay is of special interest. In united state stock option are commonly believed to tie pay of executives to the financing performance of the company.
Employees:
Employee may see compensation as an exchange of service rendered or as a reward for a job well done. Compensation to some reflects the value for their personal skills and abilities, or the return for the education training they have acquired. The pay individual receive for the work they perform is usually the major source of personal income and financial security and hence a vital determinants of an individual economic and social well being.
Managers:
Managers also have a stake in compensation: it directly influences their success in two ways. First it is a major expense competitive pressure both internationally and domestically, forces managers to consider the affordability of their compensation decisions. Studies show that many enterprises labor costs account for more than 50% of total costs. Among some industries, such as service or public employment, this figure is even higher.
According to G.T Milkovich and bloom "perception of compensation differ within countries as well. Some in society may see pay difference as a measure of justice.
Stockholder View:
To stockholder, executive's pay is of special interest. In united state stock option are commonly believed to tie pay of executives to the financing performance of the company.
Employees:
Employee may see compensation as an exchange of service rendered or as a reward for a job well done. Compensation to some reflects the value for their personal skills and abilities, or the return for the education training they have acquired. The pay individual receive for the work they perform is usually the major source of personal income and financial security and hence a vital determinants of an individual economic and social well being.
Managers:
Managers also have a stake in compensation: it directly influences their success in two ways. First it is a major expense competitive pressure both internationally and domestically, forces managers to consider the affordability of their compensation decisions. Studies show that many enterprises labor costs account for more than 50% of total costs. Among some industries, such as service or public employment, this figure is even higher.
In addition to treating pay as an expense, a manager also treats compensation as a possible influence on employee work attitude and behavior and their organization performance. The way the people are paid affects the quality of their work, their focus on customer needs, and their willingness to be flexible and learn new skills, to suggest innovation and improvement, and even their interest in union or legal action against their employer.
FORMS OF PAY
FORMS OF PAY
Total compensation includes pay received directly as cash (e.g., base wage, merit increases, incentives, and cost of living adjustment) or indirectly through benefits and services (e.g., pensions, health insurance, paid time off). Programs that distribute compensation to employees can be designed in an unlimited number of ways, and a single employer typically uses more than one program. The major categories of compensation include base wage, merit pay, short and long term incentives, and employee benefits and services.
Base wage
Base wage is the basic cash compensation that an employer pays for the work performed. Base wage tends to reflect the value of the work or skills and generally ignores difference attributable to individual employees. Some pay systems set base wage as a function of the skill or education an employee possesses; this is common for engineers and scientists. Periodic adjustments to base wages may be made on the basis of change in the overall cost of living or inflation, changes in what other employers are paying for the same work, or changes in experience/ performance/ skills of employees.
Base wage is the basic cash compensation that an employer pays for the work performed. Base wage tends to reflect the value of the work or skills and generally ignores difference attributable to individual employees. Some pay systems set base wage as a function of the skill or education an employee possesses; this is common for engineers and scientists. Periodic adjustments to base wages may be made on the basis of change in the overall cost of living or inflation, changes in what other employers are paying for the same work, or changes in experience/ performance/ skills of employees.
Incentives
Incentives also tie pay directly to performance. Sometimes referred to as variable compensation, incentives may be long or short term, and can be tied to the performance of an individual employee, a team of employees, combination of individuals, team of employees, a total business unit, or some combination of individuals, teamed unit. Performance objectives may be defined as cost savings, volume produced, quality standards met, revenues, return on investments or increased profits; the possibilities are endless.
Incentives also tie pay directly to performance. Sometimes referred to as variable compensation, incentives may be long or short term, and can be tied to the performance of an individual employee, a team of employees, combination of individuals, team of employees, a total business unit, or some combination of individuals, teamed unit. Performance objectives may be defined as cost savings, volume produced, quality standards met, revenues, return on investments or increased profits; the possibilities are endless.
Long-term incentives are intended to focus employee efforts on multi year result. Top managers or professionals are often offered stock ownership or bonuses to focus on long-term organizational objectives such return on investments, market share, return on net assets and the like. Coca-Cola grants shares of stock to selected "key contributors" who make outstanding contribution to the firm's success. Microsoft, Pepsi, Wal Mart and Proctor & Gamble offer stock options to all their employees. These companies believe that having a stake in the company supports a culture of ownership. Employees will behave like owners.
Incentives and merit pay differs. Although both may influence performance, incentives do so by offering pay to influence future behavior. Merit on the other hand, recognizes outstanding past performance. The distinction is a matter of timing. Incentives systems are offered prior to the actual performance; merit pay on the other hand, typically is not communicated beforehand.
The national commission on labor makes the following recommendation with respect to incentives:
(a) The application of incentives schemes has usually to be selected and restricted to industries and occupations where it is possible to measure on an agreed basis, the output of workers or a group of concerned workers and maintain a substantial amount of control over its quality.
(b) Incentive schemes have to embrace as many employees of an enterprise as possible and need not be limited only to operative or direct workers.
(c) A careful selection of occupations should be made for launching incentives scheme with the help of work-study teams commanding the confidence of both the employer and employees. The incentive scheme is required to be simple so that the workers are able to understand its full implications. The employers need to ensure that external factors such as non-availability of raw material and components, transport difficulties and accumulation of stock do not exert an unfavorable impact on incentive schemes.
(d) Production has to be organized in such a way, which does not provide incentive wage on one day, and unemployment on the other day- there should be a provision of the fullback wage as a safeguard against it.
(d) Production has to be organized in such a way, which does not provide incentive wage on one day, and unemployment on the other day- there should be a provision of the fullback wage as a safeguard against it.
(e) According to Subramaniam, there are several prerequisites to the effective installation and operation of payment system:
a.) It should be developed and introduced with the involvement of the workers concerned in a harmonious climate of industrial relations.
b) Work-study precedes the installation of incentive programs.
c) The wage structure should be rationalized on the basis of job evaluation before devising an incentive plan.
d) The objective to be accomplished through incentives should be defined and accordingly, an attempt should be made to select a scheme, which is most suitable to accomplish them.
b) Work-study precedes the installation of incentive programs.
c) The wage structure should be rationalized on the basis of job evaluation before devising an incentive plan.
d) The objective to be accomplished through incentives should be defined and accordingly, an attempt should be made to select a scheme, which is most suitable to accomplish them.
BENEFITS & SERVICES
The fringe benefit systems purported to develop a climate for healthy employer-employee relationship, minimize excessive labor turnover costs and provide a feeling of individual security against hazards and problems of life with a view to eventually enhancing employee loyalty to the company and improving productivity.
M.Chandra lucidly describes fringe benefits provided by the employers to their employees under the statutory provision or on a voluntary basis. The social services provided under the factories Act, 1948, in the manufacturing industries include canteen, rest shelters, crèche , storage or lockers, sitting arrangement, bathing and washing facilities and appointment of welfare officers, etc. other benefits include festival, year-end profit sharing, attendance and production bonuses, protective equipment's, free supply of food items on concessional rates. Social security system provides benefits such as provident fund, employees state insurance (ESI) scheme, retrenchment compensation, employment injury compensation, maternity benefits, gratuity, pension, dependent allowance and contribution toward pension and gratuity claims.
In addition, other facilities enjoyed by the workers include medical and health care, restaurants, cooperative credit societies and consumer stores, company housing, house rent allowance. Recreational and cultural services, clubs, cash assistance. Some employers also provide education, transport facilities and conveyance allowance.
Good Compensation Management Necessary to Boost Workforce Performance!
By Richard Boutcher
Compensation planning is taking new shape with the revolutionary changes in economic condition. Smart companies have realized that retention and successful recruitment highly depend upon the pay structure and better understanding of the working group. A better planned compensation program results in high morale, which leads to better performance, while generating more engaged workgroup.
Good Compensation management program makes sure that compensation given is directly linked to delivered performance. This can be done by providing reward to the top performers as well as enhancing the workforce productivity without any budget overrun.
Through proper compensation planning the compensation managers can implement and model one of its kind compensation programs to reward the top performers whilst driving the performance of the company. Hence, it is very important and crucial for a company.
A standard compensation management system is an automated, powerful product to administer and build flexible compensation plans. Being a self service web based system; it can be implemented with iota of training. Nowadays World Wide Web has made it globally deployable and hence increasing the workforce productivity around the globalized world.
Benefits through good compensation planning-
o It reduces administration by saving your money, time and resources through replacement of manual processes, streamlining of compensation planning whilst relieving Human Resource department from administration of every days.
o A compensation management system containing good compensation plan enhances the performance of the employee by delivering world-class technology to make a plan which directly knot the performance of the employee to the corporate goals.
o Retention is improved through rewarding top performers with long term and short term incentives which is based on complex or discretionary, compensation plans based on policies.
o A compensation management system containing good compensation plan enhances the performance of the employee by delivering world-class technology to make a plan which directly knot the performance of the employee to the corporate goals.
o Retention is improved through rewarding top performers with long term and short term incentives which is based on complex or discretionary, compensation plans based on policies.
Different ideas for Compensation planning are available online and hence out of varied options it becomes difficult, which one to choose. One of the best known is Plateau compensation that has all the essential features, including multiple currency support, flexibility etc. You must visit plateau.com to know more about its product on compensation management. The compensation resource centre of Plateau is well equipped with the right compensation strategy for your business. Here you can also access the most recent information on compensation comprising press articles, whitepapers, datasheets, upcoming events and case studies too. For more information visit plateau.com, the best platform for all your needs related to compensation and much more.
A standard compensation management system is an automated, powerful product to administer and build flexible compensation plans. Thus compensation planning is very crucial for any company.
Incentive Compensation Tips for Managers
By Bill Lee
Designing an incentive compensation plan is one of the most powerful tools managers can use to motivate employees to go the extra mile; that is, to expend the extra effort to go over and beyond the call of duty. However, small unintended mistakes in establishing the rules of the incentive plan can significantly reduce how much the plan motivates workers.
I have used incentive compensation plans for years and in doing so, I have learned plenty about what to do, but also about what not to do. For example, if there is a loophole in the plan, I promise you that your employees will find it on day one, so pay special attention to Tip Number 7.
Before you publish your incentive pay plan, consider the following 12 tips:
1. Don't intermingle incentive pay with regular pay. Pay incentive compensation with a separate check so that should an incentive plan be terminated, it won't appear to the employees that the company has cut their pay.
2. Don't run incentive plans indefinitely. If you do, they will tend lose some of their motivational influence over employee behavior.
3. To motivate an employee, incentive pay must represent a significant portion of the employee's total pay. For example, an opportunity to earn a $500 monthly incentive check will not motivate an employee earning $8,000 per month.
4. Cash or incentive pay is only one way to incent employees. Consider also: Premiums, travel, dinner for two, a weekend for two at a nice hotel, days off with pay, etc.
5. When kicking off a new incentive plan, advise all affected employees in advance that management will evaluate how long to continue the plan after the plan has been in effect for 90 days.
6. Resist putting ceilings on incentive pay plans.
7. Before you announce a new incentive plan, ask several loyal employees to review your new plan for loopholes. Run the numbers and then run them again to make sure that you have considered all possibilities.
8. Pit employees' performance against a quota or a goal, never against each other.
9. Incent behaviors you want to see more of.
10. Incentives are no substitute for proactive management activity. Managers have to manage whether or not an incentive pay plan is in place.
11. Don't over react if an individual employee receives a wind fall because he or she hit a home run.
12. Decide upfront if you are going to deduct income tax before issuing incentive paychecks. Make your decision clear to all affected employees in advance of kicking off the incentive plan.
International Business - Expatriate Compensation
By Michael A Conway
Is there any Human Resource department in the country that would take a request to assume responsibility for budgeting an employee's housing, furniture, utilities, transportation and education expenses seriously?
Many HR departments not only entertain such requests, they actually fulfill them - often without even being aware of it.
This "budgeting" is an insidious part of many companies' approach to compensating expatriate employees. In an effort to reward employees for their willingness to leave home, companies offer a variety of payments to supplement base salary, much of it designated for specific purposes, such as housing or education. The result is that the company, in effect, assumes responsibility for managing the employee's finances.
Although the intent of such payments is laudable, the reality is that the system generally results in greater overall expense - sometimes to the point that the company's original intent in establishing an overseas operation in the first place is undermined.
Today's competitive economy offers companies the perfect opportunity to reassess the situation and put the responsibility of budgeting back where it belongs: in the hands of employees themselves.
The balance sheet has a long history in expatriate compensation practice. It was designed to provide a no loss-no gain adjustment for overseas costs that exceeded those in the United States. In theory, positive differentials were applied when costs were higher and negative or no differentials applied when costs were lower.
The balance sheet as currently used, however, may have fundamental flaws that contribute to the failure rate of employees assigned abroad, the substandard performance of many employees and the failure of US multinationals to achieve planned objectives in their overseas operations.
Moreover, these compensation policies are a source of discontent among repatriated employees returning to the United States after assignments in which housing, transportation, schooling, club membership, and other expenses were partially or fully reimbursed.
When those reimbursements and basic overseas incentive pay are eliminated, the result is often a financial shock from which returnees never fully recover.
Most US multinationals justify the added expense to project a quality image overseas or in the belief that most Americans are highly inconvenienced on foreign soil simply because the place is different.
Expatriates should be additionally compensated for their willingness to leave family, friends and familiar surroundings on the company's behalf, but existing programs have created three general problems:
o Inappropriate lifestyles,
o Dysfunctional distractions from the job and,
o Intensified repatriation issues.
Inappropriate lifestyles. Under balance sheet compensation policies, an employee assigned overseas receives an itemized printout of allowances from his or her company.
The printout prepared by the HR organization varies from employee to employee based on job title, US base salary, family status and country of assignment. These data reflect living costs (food, services, housing, transportation and so forth) and are generally expressed as differentials above those of a typical US family of the same size as that of the expatriate. The company normally obtains such data from outside consultants who specialize in balance sheet estimates.
The problems that emerge from this itemized, inflexible method of providing expense allowances come from the fact that the estimates for living abroad are not the ceilings but, effectively floors. Thus, if the balance sheet prepared by the company and its consultants allocates $2,000 per month for housing, that amount dictates the type of housing sought regardless of whether less expensive accommodations could have been found. The same hold true for other areas - such as transportation, club memberships, etc.
What this means is that the majority of expatriates opt for maximum allowances. Americans assigned overseas not only live better than expatriates from other countries with whom their companies compete - but far better than most local nationals in similar positions.
These relatively high allowances remove the incentive for Americans abroad to save money by investigating the local marketplace, using the same services as colleagues at work, or purchasing local products.
The effect, furthermore, is more than financial. The key to successful adjustment overseas is acclimatization and the ability to blend in with the local culture, economy and lifestyle of the indigenous population, or at least that part of the population touched by the day-to-day work assignment.
It is a curious anomaly that US companies focus a good deal of time and money on orientation and cultural training, only to provide a compensation package that reinforces directly contradictory behavior.
Dysfunctional distractions. The balance sheet has created a new kind of game between employees and the home office - one that is unknown in domestic compensation practices and can be a serious distraction overseas.
Because the balance sheet provides allowances based on a typical family and uses approximations of US quality or equivalence overseas, it is, of course, subject to interpretation. Furthermore, because savings are unlikely to accrue to employees, it is therefore in the employees' best interest to ensure that interpretations fall in their favor and that all allowances are maximized.
This generally begins an ongoing dialogue with the home office that lasts throughout the tour and covers topics ranging from what kind of housing can really be located (as opposed to what the consultant reported) to who will pay to replace the light bulbs in company-owned lamps.
The result is that the balance sheet approach places employees in an adversarial relationship with the home office as they strive to obtain what they perceive to be their best deal.
Repatriation issues. The item-by-item balance sheet approach to expatriate compensation, with no incentive for choosing less expensive lifestyle components, is the underlying reason most Americans live better abroad than they could on an equal salary at home.
When incentive pay and other bonuses are added, overseas compensation can reach sufficient heights to create a severe sense of economic letdown when employees are repatriated.
A primary reason for this certainly is the better-that-average conditions that expatriates become accustomed to overseas. Families sometimes leave behind mansions staffed by inexpensive servants to return to ranch style homes where god forbid, they have to do their own cooking. Executives who went to work in limousines return to taking commuter trains; and club memberships taken for granted are no longer available.
In addition, the inflated lifestyle of Americans working abroad may include many non-financial advantages. In some nations, for example, employees and their spouses receive invitations to black-tie affairs, socialize with leading figures in government and the arts, and are routinely accepted as elite people in the community. Back home, their status may not be so exalted.
As a rule, HR has found that the longer a person is abroad the harder it is to adjust to life upon returning to the United States.
Conclusion
The basic objectives of any compensation program are to attract, retain and motivate. In expatriate compensation, it is time to return those basics.
The balance sheet and its subsystems of charts, graphs and cost studies have changed the focus of many of those who go overseas from job performance to an endless pursuit of, "What's in it for me?"
Companies claim that without the existing programs no one would accept an overseas assignment. Yet often these are the same companies that complain about the constant carping of their overseas work force. Clearly the wrong people are being sent overseas (many may accept assignments with the unspoken intent of financial gain) with the wrong compensation package.
The answer is simple: no nonsense compensation that provides a US base salary and a tax-equalized, all-inclusive living allowance. Such an allowance would be based on job title (salary grade), family status and assignment location. The disposition of the living allowance would be at the sole discretion of the expatriate and would, in effect, place the family, not the company, in the center of lifestyle decisions.
By removing an emphasis from piecemeal payments for such expenses as housing and transportation, the company could begin identifying a move overseas as just another relocation, focusing on job challenges and growth opportunities instead of greed.
As an added benefit, companies might save as much as 25% in expatriate expenses without materially affecting expatriate lifestyles. Those savings, coupled with fewer e-mails about who owns the light bulbs, should make any HR executive smile.
Making An Injury Claim
By Jasmin Z
Been involved in an accident and looking to make an injury claim? If you have been hurt and if the accident occurred within three years, then it may be possible for you to make an injury claim. However, before you pursue an injury claim, it is essential to be aware of what the claims procedure involves. The personal injury law is complicated and making a claim for compensation can be time consuming, stressful and daunting. Understanding the claims procedure can help you prepare yourself for the lengthy battle.
Proving liability is the first thing to do when making an injury claim. Proving liability basically means proving that another person was responsible for the accident you had been involved in. To make a successful injury claim, you will need to prove that the negligence of another person not only caused an accident, but injury as well.
Proving liability can be pretty simple in the case of road accidents. But, you cannot always expect the opponent to come up to you and admit liability. No matter what the opponent says at the accident scene, you must do your part and collect as much evidence as possible to prove your claim.
Depending on the type of accident you got involved in, you may need to obtain the following details:
- names and contact details of the opponent
- photographs of the accident scene
- insurance details of the opponent
- contact details of witnesses
- photographs of the accident scene
- insurance details of the opponent
- contact details of witnesses
No matter what kind of injuries has been sustained as a result of the accident, you must ensure that you seek medical attention. Doing so will help you get treatment and also get your injuries documented.
Seeking advice from an independent injury lawyer can help you put up a strong injury claim. Injury lawyers have in depth knowledge about the laws surrounding personal injury claims and with their skills, they can help victims of accidents recover substantial compensation for their damages.
An injury lawyer can help you with your case in a number of ways. Here is what an injury lawyer will do on your behalf:
- Send a letter of claim with the allegations of negligence along with details of injuries and losses to the opponent
- Negotiate compensation with the opponent
- Ensure that you receive maximum compensation for your injuries
- If liability is disputed, take the case to court and fight for your rights until you get access to justice.
- Negotiate compensation with the opponent
- Ensure that you receive maximum compensation for your injuries
- If liability is disputed, take the case to court and fight for your rights until you get access to justice.
Your injury lawyer will also ensure that your claim is started within the time limits, which normally is three years.
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