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Total Rewards

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I. Company requirements for a total rewards system A total rewards system development is part art and part science that begins with a purpose and objective that encompasses the business' values and strategies. This service-based company is spread out over different geographical regions and different employee levels and structure. Therefore, it is even more important that the company aligns the purpose of this total rewards system to what the company is aiming at accomplishing. The most basic elements of a total rewards system are the compensation, benefits, work-life balance, performance and recognition, and personal and career development (World at Work, 2007). The total rewards system/program needs to offer all of these components in order to be considered “total”.
For a total rewards system in such a company environment, the system has to be flexible and take into account the diversity of the company. With so many employees in so many different countries, it is important to consider the needs of these diverse peoples and how they can change from region to region and ethnicity to ethnicity. The company will also have to analyze its strategy competiveness in many different markets, so it will be required to perform many types of job analyses and surveys in order to properly determine this. For a service-based company, it is important to create clearly defined benchmarks and goals, while tied to company goals, are easily understood so that all of the multinational employees are able to reach them. This multinational company also needs to clearly communicate this program to all current employees and future employees that it wants to attract. Specific practices affect performance more by creating and promoting a specific employee-based capability, and general practices are more apt at affecting performance in broader ways by capitalizing on employee skills or motivation (Collins & Clark, 2003). Therefore, this total rewards system will use both the general practice of providing baseline benefits available to all, such as time off and insurances, and specific practices, such as benchmarks and goal attaining in order to receive further monetary gains, in order to harness both aspects of employee motivation and performance.
II. A total rewards strategy to encompass the fundamentals of compensation and the regulatory environments The company needs to recognize their diversity, working environment(s), and employee levels. It seems reasonable that a total rewards system would start its foundation with the base pay/compensation. The compensation needs to account for the employee's job position, service time of the employee, and employee location to account for costs of living. By taking these accounts into consideration, the company can create an internal equity in their compensation philosophy. The formulation of a total rewards strategy to encompass compensation fundamentals needs to begin with certain characteristics: internal equity, externally competitive, affordability, legal defensibility, efficiency, and flexibility (World at Work, 2007).
The company needs to account for external competitiveness so that their own compensation structure is at least on par with the other companies that they consider their competitors if not better. All companies want to source and keep top talent, but top talent requires something more that will lure them to your company and not somewhere else. Only by analyzing what your competitors are doing by the related surveys can one really determine how competitive your own compensation is. However, the company has to make sure that this structure is affordable to the company. It will do little good to the employees or the firm if the company has to commit more funds that it can to compensation alone as this creates a ripple effect of dedicating what probably should be retained earnings into expenses. The compensation fundamentals and philosophy has to adhere to the legal requirements of such laws and acts as the FSLA, NLRA, and anti-discriminatory laws.
A compensation system needs to be easy to use, understand, and be efficient to implement and administer. A total rewards system is something that, when done correctly, is beneficial to the company can help reduce costs and increase company productivity and profitability. If the company’s compensation system is inefficient to run, then it will be harder to communicate and take away the positive gains in productivity that were initially possible. The compensation program needs to be easy to understand, which should make it easier to run, it is easier to communicate to current and future employees. The communication aspect is an important one so that the program is understood and accepted. The program can then shine when viewed against those of its competitors. Furthermore, the program needs to have flexibility so that it can be dynamic and fluid and change with different conditions and not have to redesign every time a change is needed. All these characteristics are desired to be part of the compensation program so that the qualified employees the company is seeking are attracted, motivated, and kept for the long-term.
III. Advantages and employee satisfaction of this total rewards strategy This total rewards system is very flexible and appropriately internally equitable. Because of these necessities, this total rewards strategy can appeal to a wide variety of employees and attract future employees. Using worker's rewards based on relative comparisons across these many different markets, uncooperative behavior that is harmful to the company is reduced and morale can be improved (Lazear, 1989). Developing such a system for such wide varieties of employees is no easy task and takes a lot thought and analyzation, but being equitable for such a wide range of employee types is important if each locale is going to be able to attract talented people for a variety of job positions and geographic regions. This program also has used specific and general practices in order to harness as many aspects of garnering greater employee performance and motivation. By offering a total rewards system that aims to encompass all of the important factors of an employee's life, this program can handle changes in skill necessities and prevent imbalances of how people are paid and what their skills are earning in the long-term (Zingheim & Schuster, 2001).
IV. Key communication components of the total rewards system This service based company will need a much more comprehensive communications program than a more typical company because of the many different geographic locations and languages used. Naturally, the total rewards program will have to be translated into as many different languages as necessary so the information is accessible to everybody who works at the company. This includes written and verbal communication. A major communication component of this total reward system is the media type being used. The information for this total rewards has to be accessible all of the time for anybody who needs it. For future and current employees, a mass communication approach to do this is to utilize the Internet. This way the plan is laid out with all of its components so the employee or interested party can see how comprehensive it is. The employees can see how their personal outcomes are linked to the company’s objectives. There will then be clarification of expectations and an increased awareness among those who access the information.
The use of the Internet for communication purposes is important because the data available is able to be always current, it is on-demand information, and the ability to use links always the company website to be a hub to see all of the relevant benefits and rewards available (Canik, Crawford, & Longnecker, 2004). However, for current employees, there will also need to be personal communication to allow for a more focused approach to best utilize the elements of the total rewards program. Each of the culturally diverse locations will have to have human resource personnel that are able to effectively verbally communicate to all of the employees how the total rewards system can be tailored to suit their personal needs and what they can do to further enhance their incentives by reaching goals, benchmarks, and promotions that can entail greater program baselines.
V. The strategy for devising a competitive pay structure
The strategy for devising a competitive pay structure begins with the company’s mission and values. This service company is dedicated to delivering a top quality service to their valued customers where quality counts just as much as the quantity. However, this pay structure will have to be as fluid and flexible as the rest of the rewards program because of the aforementioned diversity of this company. A centralized pay structure is not advisable for such a multi-national firm. There will have to be a wide range of pay scales to account for the wide variety of locales and job positions so that the wanted internal equality is achieved. With an employment structure of such large number of non-management employees, there is no need to keep narrow pay ranges that promotes a management philosophy of career growth and advancement as narrow ranges would tend to do (World at Work, 2007).
The job analyses and related surveys will have to be performed over a much wider range than more domesticated companies in order to further ensure that the pay structure is market equitable if not market leading. The statistical data for the pay structures of this company will have to be individually compiled for each locale. This will produce a wide array of pay ranges, percentiles, and midpoints. There will also be a wide array of competitors to analyze as some competitors may be present in some markets but not in others. To be so multinational and diverse creates difficulty in creating a fair and justified pay structure, but, with much forethought and careful analyses, a system can be created that is seen as both internally equitable and externally competitive across many different markets.

References
Canik, A., Crawford, C., & Longnecker, B. (2004). Combating the future "retirement gap" with tailored total rewards. IHRIM Journal. September/October (2004). 2-8. Retrieved from http://ntcassoc.org/docs/Combating%20Retirement%20Gap-IHRIM_BLongnecker.pdf.
Collins, C. & Clark, K. (2003). Strategic human resource practice and firm performance: The role of human resource practices in creating organizational competitive advantage. Academy of Management Journal. 46(6). 740-751. Retrieved from http://web.ku.edu/~jleemgt/MGMT%20916/PDF/Collins%20and%20Clark%202003%20AMJ.pdf.
Heneman, J. (2007). Implementing total rewards strategies: A guide to successfully planning and implementing a total rewards system. Society for Human Resource Management. Retrieved from http://www.shrm.org/hrdisciplines/benefits/documents/07rewardsstratreport.pdf.
Lazear, E. (1989). Pay equality and industrial politics. Journal of Political Economy. 97(3). 561-580. Retrieved from http://www.jstor.org/discover/10.2307/1830455?uid=3739936&uid=2&uid=4&uid=3739256&sid=21102305222007.
World at Work. (2007). The World at Work Handbook of Compensation, Benefits & Total Rewards. Hoboken, New Jersey: John Wiley & Sons.
Zingheim, P. & Schuster, J. (2001). Winning the talent game: Total rewards and the better workforce deal. Compensation & Benefits Management. 17(3). 33-39. Retrieved from http://www.schuster-zingheim.com/docs/Winning_the_Talent_Game.pdf.

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