Manage remuneration and Employee benefits

Manage remuneration and Employee benefits
BSBHRM505A
By Takul Kanjanaphanichkul C63070

Part 1 Develop Organisation’s Remuneration Strategy
You are HR manager in a 5* Hotel located in Melbourne CBD. The strategic and operational plans have been reviewed and updated by senior management and as a result new positions will have to be created. Remuneration packages will need to be prepared for those positions.
• Conference Manager
• Sales Executive-business market segment
• Business Centre Coordinator
• Training Coordinator
Sales Executive Remuneration Package

Territory: Melbourne - Victoria
Salary: $50,000 per year
Vacation weeks: 4 weeks
Share option: an employee is granted the option to purchase 1,000 shares of the company’s stock at the current market price of $5 per share
Commission:
1. New Customer Contracts: You will be paid a commission equal to 5% of the Total Contract Value (TCV).
• Monthly Recurring Revenue (MRR): $3,000
• Contract Term: 24 Months
• Total Contract Value (TCV):
24 months X $3,000 = $72,000 Commission Calculation: $72,000 X 5% = $3,600
2. Existing Customer Renewals: You will be paid a commission equal to 2.5% of the Total Contract Value (TCV).
• Monthly Recurring Revenue (MRR): $5,000
• Contract Term: 24 Months
• Total Contract Value (TCV): 24 months X $5,000 = $120,000
• Commission Calculation: $120,000 X 2.5% = $3,000
3. New Cloud Services Kicker: Your commission percentage will be increased by 1% on any contract that includes monitoring and management of one or more Windows or Linux machine cloud instance(s).

4. Rules of the Road:
• You will be paid any commissions due to you in the pay period following the close of the contract.
• If you negotiate a contract that allows “termination for convenience” your commission will be calculated as a three-month contract.
• You must have recorded and maintained the opportunity in Sales Force to be eligible for commission payment.
• If you separate from the company, commissions due as of the date of separation will be paid in your final paycheck.
• The company can change any/all elements of this plan based on our business requirements.
Benefits, Perquisite and Insurance
• Incentive opportunities based on hotel and individual performance
• Long term incentives available at select levels within the organisation
• Medical, Dental, Life, and Disability Insurance
• Pension or 401(k) retirement plans
• Discounted hotel room rates for you and your family around the world
• Paid time off and company designated holidays
• Flexible work arrangements to help balance work and home
• Health and wellness programs
• Training, continuous education, and educational assistance
• Employee discounts and special offers
Training Coordinator Remuneration Package
Salary: $59,000
Bonus or long term Incentive: $ 0 -5,000
Vacation weeks: 4 weeks
Share option: an employee is granted the option to purchase 1,000 shares of the company’s stock at the current market price of $5 per share
Benefits, Perquisite and Insurance
• Incentive opportunities based on hotel and individual performance
• Medical, Dental, Life, and Disability Insurance
• Pension or 401(k) retirement plans
• Paid time off and company designated holidays
• Flexible work arrangements to help balance work and home
• Health and wellness programs
• Training, continuous education, and educational assistance
• Discounted hotel room rates for you and your family around the world
• Employee discounts and special offers

Task 1
a) Prepare a list of possible opportunities for development of new remuneration and benefits initiatives

To do this you will need to:
• Analyse the strategic and operational plans of the organisation
We have to analyse strategic and operational plans to determine the scope of remuneration and benefits plans. An operational plan is outline how the business units will help the business to achieve its goals as set out in the strategic plan. Strategic HR planning is a critical area of strategic organisational management because it forms the channel between the strategic plan of the organisation and HR management. The organisation is guided to successful achievement through a strong strategic plan. Strategic HR Planning needs commitment and regular review to ensure that the HR strategy is integrated with the organisational objectives.
A good compensation strategy includes a balance between internal equity and external competitiveness. Compensation and benefits affect the productivity and happiness of employees, as well as the ability of your organization to effectively realize its objectives. It is to your advantage to ensure that your employees are creatively compensated and knowledgeable of their benefits.

• Research the external environment to identify external pressures such as current remuneration practice, recent developments, legislative parameters that may impact on the remuneration strategy
We have to undertake research on current practice, recent developments and legislative parameters for the remuneration strategy.
Research current practice
Core of remuneration practices: methods used to calculate and apply pay to employees o Fixed remuneration: salaries and wages o Variable remuneration: incentives and bonuses o Benefits: leave entitlements, salary packaging options and staff discounts
Approaches to remuneration
Minimum wage: legal minimum rate depends on: o The type of employments and role classification o Age o Experience
Market matching: market comparable pay range
Legislative parameters
Legally binding rights and obligations of the employer and employee relationship
They outline the basic terms and conditions of the employment contract and include components such as: o Minimum rates of pay o Maximum hours of work o Leave entitlements
Employment entitlements are always changing. They are governed by legislation, agreements and influenced by ‘best business practice’. As this is a very fast-changing area, it is essential that hose in HR are able to stay current. There are a number of ways to do this.
 Fair Work Australia
 ComLaw
 State Legislation
 Industry Publications
 Unions
 Websites
 Wageline
 Lawyers and Accountants

• Review the factors within the organisation that may impact on choice of remuneration and benefit options
 the organisational vision and mission
 the technology
 the financial or budget
A compensation package is the combination of benefits that an employer offers to employees. This may include wages, insurance, vacation days, guaranteed raises, and other perks. Strong compensation packages are often used to attract and keep good employees, and to promote certain company values.
Designing a good compensation package is often the key to attracting talented employees and keeping them for a long time. Offering higher wages is one strategy for improving a package, but employees also value their potential to earn more money later through raises and bonuses. Understanding what the people who work for the hotel really want and providing adequate compensation can improve worker morale and performance.
We will provide our employees with programs and initiatives that support their lives outside of work, helping them achieve the ideal work/life balance to channel their passion and skills.
A list of possible opportunities for development of new remuneration and benefits initiatives for our new position are as follows:
 Salary or wages
Our hotel offers competitive market level salaries. They are reviewed on a regular basis to ensure they remain competitive in the local marketplace.
 Benefits o Incentive opportunities based on hotel and individual performance o Long term incentives available at select levels within the organisation o Medical, Dental, Life, and Disability Insurance o Pension or 401(k) retirement plans o Discounted hotel room rates for you and your family around the world o Paid time off and company designated holidays o Flexible work arrangements to help balance work and home o Health and wellness programs o Training, continuous education, and educational assistance o Employee discounts and special offers

b) Explain how the options you have identified will support the business objectives of the organisation
Remuneration and Benefits plan will outline how the remuneration and benefit practices of a business can help to support the organisation to achieve the goals set out in the strategic plan and should be updated any time strategic and operational plans are updated.
The options we have created for remuneration package of our new positions are supporting the business objectives of our hotel as one of our objectives is to maintain our position as Melbourne’s leader hotel and deliver great hotel guests love. It means we will always have a spot for talented and enthusiastic people to while also offer more opportunities to develop our employee career in many different directions. Designing a good remuneration and benefits package is often the key to attracting talented employees and keeping them for a long time.
We also have to link to remuneration strategy to consider:
• How does it impact on the ability to achieve strategy goals?
• How does the projected economic climate over the next 1, 3, 5 years impact the company’s ability to meet its goals?
• What needs to be done to meet the company’s strategic goals now and over the next 1, 3, 5 years?
• How does this impact the company’s attraction and retention plan over the next 1, 3, 5 years?
Task2
a) Prepare a presentation, to be delivered to managers for their consideration and approval, which outlines your proposed remuneration and benefits strategy and shows the links to the organisational strategic objectives. (In the classroom, your fellow learners could represent the management team)
Once we have conducted our research and believe that we have a workable proposition, supported by documented facts, we now have to develop a proposal for management. One of the most crucial elements is to relate it to the strategic objectives of the organisation. We have to demonstrate how implementing this innovation or idea will assist in the achievement of one or more of the objectives. Our report must provide sufficient information for the managers to make an informed decision. We must be precise and concise.
 Term of Reference
This section provides the reason the report was written, who requested it and any brief background information
 Procedure
Here we state the steps that were taken and the methods that we used to produce the report
 Findings
The discoveries that we made during our research and development of the report are written up here
 Recommendations
These are the steps that we feel need to be taken and must be based on the facts that we have related in the ‘findings’ section.
Developing a high-performance workforce is about more than just compensation. Employee goals must be aligned to business objectives and, more importantly, employees must be motivated to achieve success for themselves, the team and the organisation
We design or review our organisation's current remuneration strategy to managers for their consideration and approval as follows: o assisting to define the remuneration and benefits strategy o evaluate the current remuneration and benefits strategy and ensure there is a transparent link between this and the broader HR and business strategies o determine our organisation's current remuneration market position o identify our organisation's target market/s and target market position/s o establish the optimal mix of base salary, benefits and performance (variable) pay within employees' salary packages o review employee benefits or introduce new employee benefits that are tied into the overall remuneration strategy o transition to a 'Total Employment Cost' model of structuring and communicating remuneration and benefits packages o determine the appropriateness of salary packaging within our organisation; and/or review current 'best practice' and identify relevant 'best practice' techniques to employ within our organisation.

Part 2 Research the market
Task Description
In these series of tasks you will be required to compare the remuneration and benefits plans of your organisation to those offered by similar organisations in the market. To ensure your organisation is able to attract and retain the right employees for the challenges of the future the remuneration and benefits offered by your organisation must be competitive and attractive.
Task 1
a) Conduct a gap analysis to compare the remuneration and benefits offered by your organisation with market practice.
Market competitiveness: We will compare our compensation components against the market in which we function or against other internal roles.
• Does our organization strive to pay at market, above or below market?
• Do you want to have your salaries above average, average or below average? Will your benefits/incentives balance for salaries?
• What do you want to offer to distinguish you from others in your sector?
• How do you want to be viewed by your stakeholders?
• How generous should your benefit program be compared to cash compensation?
To analyse market competitiveness, we will base our analysis on:
• Web research
• Review of journals and publications
• Interviews with representatives of other organisations
• Analysis of salary surveys or benchmarking activities
• Review of organisational policy and practice
• Analysis of industrial agreements
• Analysis of relevant legislation
Compensation systems must be consistent with the existing legislation in the areas of Labour Standards, equal pay, Human Rights, Employment Insurance, pension or retirement benefits, labour relations and Occupational Health and Safety. Regularly reviewing the HR Toolkit, key government websites, and connecting with an HR and/or legal professional can help you ensure you’re your organization’s compensation practices are in compliance with current legislation in your jurisdiction.
Task 2
a) Select 2 positions within your organisation or given scenario (for example Sales Managers, Customer Service Staff, Accountants, Accounts Payable Assistants, etc...)
Identify which awards or industrial agreements apply to these positions
Enterprise agreements include specific conditions for one workplace. Modern awards are a safety net of minimum conditions for a whole industry or type of job.
When a workplace has an enterprise agreement, the modern award doesn’t apply. However, the pay rate in the enterprise agreement can’t be less than the pay rate in the modern award. Any terms about outworkers in the modern award also still apply.
Advertising Sales Manager is under Advertising Sales Representative Award
Customer Service staff is under Hotels, Motels, Resorts and Accommodation Award

b) Conduct a market rate survey for your chosen positions and comment on your organisation’s competitiveness in relation to those roles.
Review market rates surveys regularly to ensure the required level of competitiveness
Company determine our rates of pay: o Minimum wage: legal minimum rate o Market matching: market comparable pay range which is available through market rates surveys
Market rates surveys conducted by professional analytical organisations (Survey companies) specific to Human Resource or the industry.
We have to find out how we want to position our company:
• 25%: new entrants with little or no experience
• 50%: competent performers with some experience and skills
• Average: all salaries totalled, divided by their number
• 75%: premium performers with some high-level experience and skills
We also have to use Market Rates Surveys Data
• Use-by date, i.e. valid only at the point of its capture
• By the time, it is analysed and published, it is no longer current, thus it must be AGED for the period in which it is to be applied; take into account o Predicted salary movements for the next year o Date of the survey data o Period your wish to apply it to o Company’s competitive position within the period ( lead the market, or lag the market = follow the market)
We use data from advertised jobs, Mycareer website so it’s the going rate right now. We’ll also find trended data, the latest salary articles & use their Pay Rise Calculator to see what ends up in our pocket. Then compare market rates to our company’s pay rates to get an efficiency rates.
From Source: MyCareer job listings inclusive of wage from the last 90 days and updated weekly. Figures show Average Australian Hospitality, Travel and Tourism Salary. For example:
Average Australian Hospitality, Travel and Tourism Salary Average min Average max Average
Sales $35,000 $119,999 $60,955
Customer service $ 33,592 $100,000 $56,523

c) What changes to the approach your organisation takes to remuneration and benefits for these positions would you recommend to enhance your organisation’s capacity to attract and retain these types of staff?
Hiring employees is just a start to creating a strong work force. Next, we have to keep them. High employee turnover costs business owners in time and productivity. Therefore these changes are taken to retain our employees. o Offer a competitive benefits package, including health and life insurance and a retirement plan. o Provide employees financial incentives such as raises, bonuses and stock options. o Consider hiring a human-resources manager if our company is nearing 100 employees. o Make sure employees know what's expected of them and how they can grow within our company. o Conducts “stay” interviews. In addition to performing exit interviews to learn why employees are leaving, consider asking longer-tenured employees why they stay. o Promote from within whenever possible. And give employees a clear path of advancement. Employees will become frustrated and may stop trying if they see no clear future for themselves at your company. o Foster employee development. This could be training to learn a new job skill or tuition reimbursement to help further your employee’s education. o Create open communication between employees and management. Hold regular meetings in which employees can offer ideas and ask questions. Have an open-door policy that encourages employees to speak frankly with their managers without fear of repercussion. o Get managers involved. Require your managers to spend time coaching employees, helping good performers move to new positions and minimizing poor performance. o Communicate your business’s mission. Feeling connected to the organization’s goals is one way to keep employees mentally and emotionally tied to your company.

Part3 Implement remuneration strategy
Task Description
In addition to the gap analysis and the salary surveys you have completed in part 2, implementation of your remuneration strategy also involves aligning the remuneration and benefits plans of the organisation with the performance management system used within the organisation and ensuring that salary packaging and incentive arrangements comply with organisational policy and legislation.
If you will be completing this activity in your workplace, you will need access to the following:
• Documentation regarding the performance management system
• Information about the options available for salary packaging with the organisation
• Access to or information about processes used to ensure compliance with legislation regarding remuneration and benefits
Task 1
a) Describe the link between the remuneration and benefits plan and the current performance management system used within the organisation

Align remuneration and benefits plans with performance management system:
Performance management system: formal process of assessing employee performance o Goal identification o Performance assessment o Action plan

High performing and high potential employees are gaining a greater focus for employers who are investing more attention and science to understanding these individuals in their organisations. However, it is more difficult to find and retain qualified performers.

It is about balance of high remuneration and perks which are essential to creating a high performance workplace.

There will always be differences in performance and potential among an organisation’s employees. Most of the work gets done by ‘meets expectations’ employees. It is important to keep them engaged because they influence the climate and culture in which our high performers must succeed.

Performance-related pay is when a worker is paid for the results of their work. A high performance will be conducted when the expectations of the employer are clearly communicated in a numeric manner is a fairer and more equitable measure such as minimum standard of sales per month.

Employees would be secure in knowing that their performance was evaluated objectively according to the standard of their work instead of whims of a supervisor or against an ever-climbing average of their group. Therefore, when our organisation is working to determine our remuneration and benefits, we must also align these with the performance standards.

We will use strategic management which is called ‘The balanced scorecard’ to identify and improve various internal functions and their resulting external outcomes. It attempts to measure and provide feedback to organisations in order to assist in implementing strategies and objectives by isolating four separate areas that need to be analysed:
• Learning and growth
• Business processes
• Customers
• Finance

b) Discuss the benefits and disadvantages of aligning the remuneration and benefits plan with the performance management system in your organisation

A Company Paying Executives with Stock Options is one of our organisation’s remuneration and benefits plan. The benefits and disadvantages of this option are as follow:

Companies increasingly offer stock options to employees as both a perk and additional compensation. Executives and other members of a company’s management frequently receive large benefit packages with plenty of stock options. Paying company executives with stock options has many advantages for the company, but overuse can lead to problems for the company, the shareholders and the executives.

Aligning Interests
Stock options align management's interests with those of the shareholders by making management owners as well. By paying executives in stock options, executives receive a direct and personal financial incentive to better the company's performance. Executives also have a disincentive to mess up, because if share prices drop as a result of bad performance, executives lose lucrative options. Aside from their salary, bonus and other benefits, executives can cash in hundreds of thousands of dollars or more if their hard work results in higher share prices.
Cheap & Easy
Stock options are a cheap way to give executives lucrative benefits. When the company issues stock options, they must expense it as compensation. However, while that expense shows up as a cost in a profit report, the option requires considerably little cash on the company's part. This makes stock options particularly attractive to companies that want to invest as much of their cash as possible into capital improvements, acquisitions and other things that grow the company.

Task2
a) Describe how the salary packaging options offered by your organisation comply with legal requirements and organisational policies. (Consider at least 3 different forms of legislation)
Ensure that our employees receive at least their minimum entitlements according to organisational policies and legal requirements.

In our undertakings in relation to employee benefits, we must strictly comply with all legislative requirements which are;

• Enterprise Agreements is a voluntary and negotiated agreement between employees or their union representatives and their employer. The agreement is designed and tailored specifically for their workplace and their environment.
They set our conditions of employment for a group of employees at one or more workplaces.
• Modern Awards are industry or occupation based minimum employment standards which apply in addition to the National Employment Standards (NES)
• Contacts Written common law contracts of employment also set out wages and conditions for employees not covered by an award or agreement.

The salary packaging included within the Enterprise Agreement, Modern Award and Contact will not include payroll tax or workers compensation insurance but they may include:
• Salary
• Allowances
• Motor vehicles
• Fringe benefits

b) Describe how incentive arrangements (e.g. bonuses, share options etc...) comply with the organisation’s remuneration strategy
Our organisation is able to use other methods to provide incentive and motivation to employees such as:
• Commission the amount of money that an individual receives based on the level of sales they have obtained.
• Bonuses is a payment or gift added to what is usual or expected in particular and amount of money added to wages on a seasonal basis, especially as a reward for good performance.
• Share options from an employer give the employee the right to buy specific number of shares of their organisation’s stock during a time and at a price that employer specifies.
Task 3
a) Identify 3 different pieces of legislation that require your organisation to make regular monetary contributions on behalf of staff. (e.g. superannuation)
• Flexible work arrangements when employees work flexible schedules from a variety of locations and even share jobs. The most notable flexible work arrangement include: o Flexitime: employees set their own starting and quitting times within limits determined by management. o Job sharing: two people share the responsibilities of one full-time position o Compressed workweek arrangements: employees work 38 hours in fewer than five days, commonly this means four 10 hour days each week o Telecommuting employees: work from home during some of their scheduled hours but may come into the office one or two days each week to go to meetings and stay in touch with co-workers.
• Sick leave is an option for employees when they are sick or injured, and are unable to attend work. It is an entitlement of employment in Australia.
• Superannuation the employer must pay into the employee’s super account a minimum of 9.25% of the employee’s ordinary time earnings, up to the ‘maximum contribution base’ at least every three months. These contributions are in addition to the employees’ salary or wages. b) Describe the methods your organisation uses to ensure employees receive their minimum entitlements. How could these methods be improved?

Terms of Employment Minimum Entitlements Provided by Law
The employer is required under the Terms of Employment (Information) Acts, 1994 and 2001 to give all employees certain information in writing - the important elements of terms of employment - within two months of commencing employment.
This information must include:

• The full names of the employer and the employee
• The address of the employer
• The place of work, or where there is no main place of work, a statement indicating that an employee is required or permitted to work at various places
• Job title or nature of the work
• Date of commencement of employment
• If the contract is temporary, the expected duration of employment
• If the contract is for a fixed-term, the date on which the contract expires; if the contract is for a fixed purpose, then the details of the occurrence of that specific purpose
• The rate of pay or method of calculating pay
• Whether pay is weekly, monthly or otherwise
• Terms or conditions relating to hours of work, including overtime
• Terms or conditions relating to paid leave (other than paid sick leave)
• Terms or conditions relating to incapacity for work due to sickness or injury
• Terms or conditions relating to pensions and pension schemes
• Periods of notice or method for determining periods of notice
• A reference to any collective agreements which affect the terms of employment

This method could be improved by auditing:

We have to ensure the employees receive at least minimum entitlements in accordance with the organisational policies and procedures then carry our entitlement audit:
• A regular entitlements audit to ensure all agreed employment conditions are met within the company
 Pay and loadings
 Expected hours of work
 Annual leave
 Personal leave
 Unpaid parental leave
• Compliance audit steps
 Review organisational policy and legal requirements to determine the minimum compliance levels
 Collect information to determine organisation’s status against minimum compliance levels
 Conduct review of status against compliance levels to determine any deficit
 Develop and action plan to address the deficits
 Implement action plan to address compliance deficits

Part 4 Review and update remuneration strategy
Task Description
This task requires you to review and update your remuneration strategy in consultation with relevant managers and in accordance with organisational policy and legal requirements.
Task 1
a) Detail what you would discuss with relevant managers to ensure the effectiveness of your remuneration strategy

We have to consult managers and employees about the effectiveness of the remuneration strategy. To consult is to talk to employees and their representatives about the procedures to be used when consulting.

Consultation procedures can be tailored to each workplace as long as agreed consultation procedures are developed and agreed with employees and their representatives. The procedures must be consistent with the Fair Work Australia Act 2009.

There must be sufficient information to allow managers and employees to express their views and those views must be taken into account.

Once we have established consultative mechanisms and procedures for our workplace, we need to make sure that everyone understands them and knows how they can raise any issues as following:
• job evaluation/job sizing
• design and implementation of remuneration structures
• development of integrated performance management systems
• design of bonus, incentive, and employee ownership plans
• the area of non monetary rewards
• the development of software or administrative systems to support remuneration strategy.
Consult implementers
 who: those who assisted with the implementation of the remuneration strategy
 when: at the completion of the implementation once any changes have had a chance to take effect ideally one cycle through and after the meeting with the impacted people
 Where: general meeting room
 What: agenda

b) Update your strategy to incorporate feedback from managers
To update strategy and plans, we have to consider:
• A review of existing strategy and plan
• A compliance check in relation to any proposed changes
• A new implementation plan to address any changes
Then review:
• Relevant strategies
• Current organisational policies
• Relevant legislation
Implementation of the plan
Once the plan has been reviewed and any required changes have been identified, the following actions need to be undertaken
• Draft new remuneration and benefits plan
• Gain executive or senior management sign-off
• Implement the new plan
• Conduct a post-implementation review of the new plan

c) Develop and ongoing review process to ensure your remuneration strategy remains in alignment with organisational policy and legal requirements
Compensation systems must be consistent with the existing legislation in the areas of Labour Standards, equal pay, Human Rights, Employment Insurance, pension or retirement benefits, labour relations and Occupational Health and Safety.
Regularly reviewing the HR Toolkit, key government websites, and connecting with an HR and/or legal professional can help you ensure you’re your organization’s compensation practices are in compliance with current legislation in your jurisdiction