Perk – up!

This is an ongoing discussion on CiteHR http://www.citehr.com/282708-10-perks-employees-love-must-read.html

In search of employee satisfaction, benefits are bundled targeting the area covering the needs of employees. Maslow’s Need Hierarchy directs us to design compensation structures including different offering that can appeal across the continuum. Certain offerings such as Company leased accommodation or Car benefits no sooner or later, shifts to be a hygiene factor. At this juncture perks are innovated to cushion and offer higher equity to the employee.

‘Perk’, the word stands for the cluster of addendum over and above the compensation offered to the employees. The core idea is to enhance loyalty, increase morale and reduce stress. At the point of consideration, an in-depth study on the employee needs is done. This results in recommendations which are matched to the budget and taxation guidelines. A bevy of monetary and non- monetary offerings are implemented. This covers the need for acknowledgement and other perquisites of the employees. During implementation special care needs to be taken to communicate. Managing expectation around the perks would be a deciding factor to the success of the program. Information including, the parameters to avail, the time limit if applicable and contact points needs to communicated. Incase there is a cul-de-sac scenario, hybrid can be be considered. For e.g. : If the employees are supposed to be eligible for tuition fee of their children, a limit of the amount to be reimbursed needs to be mentioned along with the condition that it would be applicable for the two first born children of the employees. The employee would be eligible post-probation. Incase the employee‘s first two born’s have completed their education and the employee requests for support for other wards. Such a request can be considered if the policy for this benefit includes a clause mentioning a fixed amount for the tuition fees or the actual, whichever that is lower. Finally the perks would need regular monitoring to measure their effectiveness . It includes focussing the performance area for the perks to show improvement.

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Equity Based Compensation

A discussion in CiteHR http://www.citehr.com/284260-design-equity-based-compensation-start-up.html

The compensation of company is driven by several factors including market competitiveness, cost containment, internal equity, transnational mobility and compliance. The performance of company directly depends on the performance of its assets. Hence, designing an empirical compensation structures which would drive performance. This structure is known as Equity Based Compensation. This allows an employee to opt for the stock options. This program ensures an equal distribution of profits between the shareholders and employees.

The steps to design it begin with setting a time-limit, such as five years during which the employee needs to work in an organization. There would be a cap to the equity, mentioning the percentage for each role and level. The rewards for performance achievements in a year need to be designed in it. For e.g. : there can be a Business Performance Equity designed at 12 % of the market rate or share price valuation of the company ,which needs to accumulates for five years for the employee to claim it. In addition to this, a solution Equity is designed , for the employee ,to target any remarkable service or solutions offered to the company, such as new product designed or gross sales increase and etc. The solution equity would be defined by a specified percentage of the fixed salary, e.g. 120% of the base salary or basic. The roll out for the incentive can be directly tied to the cash-flow cycle of the company to negate the strains on it. As defined by Thomas J Hackett and Donald G McDermott, “The plan detailed specific goals for company revenue, earnings before interest and taxes (EBIT), and profitability. Based on the plan, the sooner the company achieved its EBIT targets, the sooner each executive entitled to a percentage of the EBIT generated. The executives could then choose to receive payment in either cash or additional equivalent shares of company stock based on valuation at that time.” The taxation can be set are per the compliances .Generally an employee do not get taxed when the shares are credited. It would become taxable when the employee sells it, strictly according to the taxation guidelines. The structure needs to be deigned keeping the International mobility in mind. A hybrid form may be introduced in case the employee is put into the expat program. The employee would become taxable as per the country’s governance. Hence the structure needs to be designed so that the base salary can make up with the market competitiveness and cover the shortfall modestly.

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