WEB-BASED COMPENSATION PLANNING

Web-based compensation planning represents the web-enabled approach to an array of compensation tools that enable an organization to gather, store, manipulate, analyze, utilize and distribute compensation data and information. Let’s go through the components in the web-based compensation.

      The first component is online compensation system. In this component, there are another three components which are:

1.      Fixed compensation: its goal is to reward knowledge, skills, abilities to require performing job or role, providing adjustments for geography, inflation and market forces. It is includes bonuses (sign-on bonus, referral bonus, spot bonus reward and retention bonus), pay wage (the basic cash compensation that an employer pays for work performed), merit pay/cost of living adjustment and the equity adjustment.

2.      Variable compensation: consists of individual incentive plan, group incentive plan, and productivity gain sharing programs.

3.      Stock: consists of restricted stock, stock purchase plan, phantom stock plan, stock grant, stock appreciation right and stock options.

The second component is online benefits subsystem. In this component, there are also three other components which are:

1.      Defined benefits:

-          A type of employer sponsored retirement plan where the benefit amount is based on the employees’ average salary before he/she retire, the age of retirement and length of employment.

-          Three primary types of benefits are:

o   Flat benefits

o   Unit benefits plan

o   Variable benefits plan

2.      Flexible benefits:

-          It is a formal plan run for a set of contract period whereby staff can opt into or out of employer-paid benefits, select employee-paid benefits or take cash and allows the employees to choose the benefits they want or need.

-          Types of flexible plans:

o   Cafeteria plans

o   Flexible spending accounts

3.      Benefits statement:

-          A document issued by the entity managing a pension or retirement plan to the plan’s participants.

-          Functions of the statement are:

o   Allows employee to check the correctness of the payment they received

o   Provides employee to change the benefit election

o   Organization can communicate to employees the value of their total compensation packages.

 

Advantages of web-based compensation planning:

-          The ability to create report and presentation

-          Improve the effectiveness either by in terms of the accuracy of information or by using the technology to simplify the process

-          Changed the way employees relate to their HR departments)

 

REFERENCES

1.  Michael J. Kavanagh, M. T. (2010). HUMAN RESOURCE INFORMATION SYSTEM; Basics, Apllication, and Future Directions. USA: Apperenticehall.
2. Human Resource Information System (HRIS), Web-based Occupational Safety and Health’s Lecture Note,   by Nurnaha bt Nur Mansor