External and Internal Factors in the Reward Environment
A company’s reward structure greatly relies on the industry’s external and internal settings. Internal factors in Home International may include the firm’s tradition, ideals, and ambitions, while external elements may include the local price conditions, the government policies, and the labour market (Armstrong, 2021). After being identified, these variables are categorized into the company’s strengths and weaknesses. One aspect is regarded as strong if it has favorable consequences on the business. Conversely, a factor is a weakness if it hinders the company’s growth. Several factors must be taken into account within the company.
One internal factor influencing the reward system is staff involvement in decision-making. It is necessary for the owners to carefully set up a business management system that values its employees so that the organization can function correctly (Rohim & Budhiasa, 2019). The heads of departments must ensure that staff are fully informed of the information flow.
The culture at Home International values employee contributions and fosters a feeling of community, both of which can increase the impact of rewards. The organization’s objectives to lower costs, increase profits, and decrease turnover may also impact the environment for rewards. Companies with a high profit range and large corporate conglomerates and market shares can afford to reimburse their employees more than other organizations.
In addition, external markets such as the labour market structure can affect Home International’s reward system. Supply and demand for human resources influence the choice of pay. Employees with unique skill sets and knowledge acquired through experience are paid more than those with common skills widely in demand on the labor market. However, because of the government’s mandated minimum wage levels and employee unions’ bargaining power, the higher supply of human resources for some jobs may not result in wage reductions beyond a floor level (Rohim & Budhiasa, 2019). Furthermore, Home International uses modern technology, has high production rates, is more operationally efficient, and has access to a skilled labor pool; hence, it can offer better pay to masters.
Role of Unemployment and Payroll Data
Payroll and unemployment statistics can give information on salary patterns and market conditions. The best strategy available to Home International is to leverage payroll and unemployment data in a competitive benchmarking approach. Data on competitive benchmarking is challenging because it entails various rival firms’ analyses, assessments, and evaluations. (Mihaela et al., 2020). Traditionally, formal interviews and casual communication through contacts from other organizations are part of competitive benchmarking research methodology. This data can be used to assess whether salaries are competitive in the market today and to spot any inconsistencies or potential improvement areas.
Home International may also examine the cost of implementing a new compensation plan using payroll data to ensure the business stays profitable. They can ensure that pay is sufficiently offered on the labor market, or at the very least, reflect the worth of employees to the business. A bigger picture perspective on how payroll and unemployment numbers affect a business may also be helpful (Mihaela et al., 2020). Through the analysis of the payroll data, the manager can understand the incentive systems and benchmarking procedures used in Home International. For instance, Home International can utilize payroll information to calculate the cost of bonuses and other benefits and see how they affect the company’s bottom line.
Correspondingly, unemployment data can give information on the accessibility and price of talent, which can assist Home International in creating attractive compensation plans. Data on unemployment can be beneficial for pinpointing potential talent shortages. Organizations might direct their recruitment efforts toward those locations with high unemployment rates to attract top talent.
Information about unemployment can also assist businesses in keeping their staff by revealing trends in the labour market. Understanding the labour market enables businesses to spot potential exit points for their staff and proactively modify compensation packages to keep the best employees (Anwar & Abdullah, 2021). In addition, statistics on unemployment can be used by businesses to analyze the cost of their compensation plans.
Example of a Reward Package
The compensation plan should combine intrinsic and extrinsic benefits, such as flexible work schedules, bonuses, and health insurance. The home international furniture can offer incentive management packages that include compensated days off in case of a family member’s or a close relative’s death, leave for training sessions, sick time, flexible working hours, and a work-from-home option. Organizations employ the process of job evaluation to assess the relative importance of various job roles within their organization. In this process, each role’s knowledge, abilities, and responsibilities are often evaluated and compared to those of other roles within the business and to those throughout the broader labor market (“CIPD,” 2021). The job assessment process entails job analysis of roles involved, such as the duties and responsibilities, knowledge and skills needed, educational and professional requirements, selection methods such as classification and ranking, and job grading.
The company can create a suitable compensation plan for each role after the job appraisal procedure. The company may offer pay for the Manufacturing Operative position based on the job grade decided by the job evaluation process and other perks, including health insurance, retirement savings plans, and paid time off. The company may also provide performance-based rewards like bonuses or profit-sharing to encourage excellent performance.
The firm may use benchmarking data to ascertain the market rate for comparable roles in the industry to design an acceptable compensation package for the HR Administrator role. According to the benchmarked data, the average wage for a manufacturing worker in the United Kingdom is 22,579 Euros per year, or 11.58 Euros per hour (“CIPD,” 2021). On the other hand, a human resources manager makes an average pay of 21.84 Euros per hour, or 42,586 Euros annually. Based on the data, the organization can establish a competitive reward package for the roles.
Legal Requirements in Relation to Pay and Working Time
The country’s laws have an impact on an organization’s compensation structure. When deciding on employee wages and working hours, every organization must adhere to local laws. The 2010 Equality Act states that men and women should receive the same pay scale because they work for the same company and perform the same tasks and jobs (“CIPD,” 2021).
This enactment forbids discrimination based on groupings such as age, gender, ethnicity, and handicap. In terms of compensation, companies must make sure that their pay and benefit plans are equitable and fair to all demographic groups. Furthermore, employers are required to pay workers the same wages if their duties and responsibilities are comparable.
The Minimum Wage Act of 1998 is another example of a law that affects reward practices and initiatives. The minimum wages that employers are required to pay their employees are outlined in this Act. The Act also outlines guidelines for accounting for time spent working, including travel, training, and other activities.
Companies must ensure that their compensation policies and plans adhere to the minimum wage and working-hour requirements. Regulations such as minimum wage laws impact employee salaries and treatment. The staff should be hired at the minimum pay per the work regulations (Khan et al., 2019). Irrespective of their gender, all employees will receive the minimum salary. This legislation’s primary goal is to guarantee equal pay for all employees.
The law also impacts home International operations and organizational structure. Every employee must receive a minimum wage, according to their obligation. The employees’ salaries cannot be determined solely by the organization (Khan et al., 2019).
The compensation scale for each employee will be determined based on the nature of their responsibilities and tasks. The Working Time Act of 1998 also specifies the weekly work limit for each employee and their right to rest breaks and vacation time. Home International must ensure that its employees take advantage of their right to annual leave and rest breaks, and that they are not working more than the allowed number of hours per week.
Reference List
Anwar, G. and Abdullah, N.N. (2021) ‘The impact of human resource management practice on organizational performance,’ International journal of Engineering, Business and Management (IJEBM), 5(1). Web.
CIPD.org. (2021). Reward: An introduction. Web.
Khan, N., et al. (2019) ‘Diversity in the workplace: An overview of disability employment disclosures among UK firms,’ Corporate Social Responsibility and Environmental Management, 26(1), pp.170-185. Web.
Mihaela, S. (2020) ‘Improving unemployment rate forecasts at regional level in Romania using google trends,’ Technological Forecasting and Social Change, 155. Web.
Rohim, A. and Budhiasa, I.G.S. (2019) ‘Organizational culture as moderator in the relationship between organizational reward on knowledge sharing and employee performance,’ Journal of Management Development, 38(7), pp. 538-560. Web.
