Compensation bench marking, ESOP, Perks & benefits

By R.Aghilandeeswari

Benchmarking
Benchmarking is the process of identifying, understanding &adapting outstanding practices from organizations anywhere in the world to help your organisation improve its performance Gregory B Watson

Compensation benchmarking
Companies today are benchmarking the compensation packages provided to their people. This helps them to motivate their employees & retain best people within their company It is done through range of salaries, companies annual report, informal contacts & other forms of market intelligence

Purpose of compensation benchmarking:Pay the employee as good as any other organization Motivate the employees to work with almost loyalty To retain the best workforce within the organization Compare the pay structures of other organizations for the same job Review the salaries when needed

Types of benchmarking
  

Internal benchmarking External benchmarking Process benchmarking

Steps in benchmarking process

Planning Analyzing Integration Action Maturity

In Planning stage:Identify who is to be benchmarked & determine the data collection method. In Analyzing stage:Determine the current compensation of target companies & set future plans of your company In Integration stage:Communicate the findings & gain acceptance from deciding authorities

In Action stage:Implement the revised salary structure & monitor the response through employee satisfaction survey. recalibrate benchmarks if needed In Maturity stage:Newly invented compensations are fully integrated into the process. Accordingly compensation is provided for the newly hired people too

Broader ways of compensation benchmarking

Competitors benchmarking:compensation benchmarking of one company with that of its market competitors Neighbours benchmarking:compensations are benchmarked among the neighbourhood companies. Employees may shift to companies which located nearby locations

Advantages of benchmarking
 It involves performance comparison with

the best in the industry  It enables the organisation to incorporate creatively the best practices from any industry  It helps the organisation to meet the requirements of the end user.  It helps in establishing quality goals & true measures of productivity

 It facilitate changes  It helps in attaining a competitive edge.  The interactions of professionals with

benchmarking facilitate future professional growth.  This will be more useful to the organisations in future assignment.

Pitfalls of benchmarking
Lack of focus and priority Lack of commitment on the part of management Failure to consider customer requirements Incompetent leadership Lack of proper planning Not involving the staff in the program Conflicting objectives of the organisation & those of benchmarking partners  Lack of adequate resources & facilities
      

Requirements for successful benchmarking

      

Understand your own company's processes &practices throughly Select the best companies for benchmarking Focus on the best practices Share companies with the companies selected for benchmarking Involve concerned people in benchmarking Use benchmark regularly Be willing to change

ESOP- employee stock option plan

Definition
An employee stock option plan is designed to give employees the right to purchase a fixed number of shares of company stock at a specified price for a limited period of time. john jackson,2003

Objectives
Encouraging the cooperation & involvement of all employees in improving the performance of the business Giving employee a sense of identification with the company Rewarding employee for past performance Generating a sense of business awareness among employees

Advantages of ESOP
  

Financial flexibility for the firm Increased employee commitment Tax advantages

Disadvantages of ESOP
Stock price do not always reflect the fundamentals of the company Employees may be at considerable risk The inability to cash in quickly can dampen the interest among the employees.

Perks and Benefits

Definition
Perks are special benefits for executives that are usually non cash items David

Commonly used executive perks

Transportation  Travel allowance  Fuel reimbursement  Housing facilities


Types of benefits
Legally required benefits Health insurance Retirement benefits Paid time off Insurance Flexibility of benefits vocations

Thank you