The Effectiveness of Profit Sharing Plans (Compensation & Benefits)
The article investigates the efficiency of compensation and benefits in the firm, notably profit sharing agreements. It is clear that the program has a substantial impact on the company's performance. Through the effective initiation and implementation of profit sharing schemes, the company will be able to fulfill its final goals on time and gain a competitive advantage in the industry. Yet, the program's success stems from its ability to generate motivation, attract competent and talented people, and retain skilled and experienced staff. Moreover, the study has reiterated the importance of establishing appropriate compensation and benefits programs to ensure the organization attains the best from its employees, encourages the development of unique culture and further surmounts overwhelming challenges.
Definition of the Topic and Overview of the Findings
Employees are indeed critical resources in enhancing organization success amid the ever-challenging external environment. Winning their support for myriad decisions enacted by the management, it requires initiation and implementation effective sharing plans including compensation and benefits (Adler & Ghiselli, 2015). Notably, compensation and benefits plans entail various measures pursued by the human resource management including reward programs, pay scales, company perks, and benefit packages. Importantly, the profit-sharing plan allows the employees to share the yields of the organization. Most organization implements this approach through giving a percentage of the business profit-based on the yearly or quarterly returns (Aslam et al., 2015). This method can be implemented through developing a retirement plan which accepts discretionary employer contributions. Currently, compensation and benefits are offered to the employees for different reasons including attracting and retaining talented and competent workers, motivating the workforce and sustaining high morale, enhancing personal and professional growth and development, and meeting legal requirements (Osibanjo et al., 2014). Moreover, profit sharing plans apparently play a pivotal role in ensuring the company brings a group of employees to work together towards a common purpose of enhancing success, augment workers to focus on profitability, and further bolsters their commitment in ensuring roles are efficiently executed (Osibanjo et al., 2014). Above all, the company uses employee compensation and benefits to achieve competitive advantage which is crucial for success in the competitive environment.
Research Findings
First, employee compensation and benefits such as profit sharing plan enable the organization to attract and retain quality employees. Undoubtedly, quality of the workers plays a significant role in determining the success or failure of the business (Aslam et al., 2015). With the overwhelming challenges in the contemporary business environment, businesses requires well trained and committed employees to ensure appropriate measures are put forth to steer the organization towards success (Adler & Ghiselli, 2015). Such individuals have the capabilities to scan the environment and plan before a problem strike. They do not give up and further capitalizes on the little resources to ensure the business stays in line with its ultimate objectives. However, such employees are attracted and retained in the company if effective compensation and benefits are offered. For instance, paying salaries or wages above the prevailing market rate in the industry allows the organization to demand employees with positive work histories as well as more experience. Consequently, hiring and retaining more qualified workers culminates to stellar results including customer service interactions and high productivity (Gupta & Shaw, 2014). Also, attaining of such aspects helps the business to improve its revenue and establish a strong identity with clients.
Second, profit sharing plans increase the commitments of employees in ensuring the company achieves its aims in the shortest time possible (Osibanjo et al., 2014). Apparently, the incentive makes workers feel appreciated for their contributions in the business which ultimately triggers happiness and loyalty towards the employer. The loyalty translates into different dimensions including a determination to give better yields to support the growth of the business (Aslam et al., 2015). Essentially, increased motivation among the employees reduces the level of supervision to get jobs done accordingly. Equally, most of the activities are swiftly discharged in the right manner thus enhancing the apt use of business resources to ameliorate success. Trimming unnecessary expenses associated with high employee turnover, inefficiency, and supervision crucially helps the company to maximize profits and support effective implementation of best management practices (Osibanjo et al., 2014). Besides, provision of compensation and benefits programs influences employees to stay focused to ensure they produce the best outcome to earn more monetary and non-monetary rewards associated with outstanding performance. Therefore, profits sharing plan bolsters the commitments of workers on ensuring the company attains its objectives and remains competitive in the industry.
Moreover, profit sharing plan encourages employee retention. It is notable that high employee turnover has devastating effects on the performance of the company. Failure to couch most appropriate strategies to ensure the best talents are retained in the business retards the overall performance because significant resources that might have been applied to paramount activities is used for training and development of employees who end up leaving (Gupta & Shaw, 2014). Losing competent and highly trained individuals to the competitors reduces the competitiveness of the company since the skills and knowledge imparted in the workers are used elsewhere rather than being applied in the institution. Furthermore, it is hard to develop and maintain a culture that enhances teamwork and commitment towards achieving business objectives (Gupta & Shaw, 2014). Besides, lack of profit sharing plan and other compensation and benefits may result to loss of high performing seniors. Consequently, management problems may set in which will indeed halt effective coordination and implementation of activities. Fundamentally, compensation plan and benefits show how invaluable the employees are of the organization success and may probably influence industrious and resourceful workers to remain despite better opportunities offered by competitors (Adler & Ghiselli, 2015). Additionally, the plan influences new employees to build their career with the company and avert established staff from jumping to other companies.
Conclusion
In summary, establishing profit sharing plan in the business is fundamental to the success of the company. It is apparent that the program enhances employee commitment in ensuring organizational activities are perfectly executed using the minimum resources possible. Equally, the business manages to attract and retain the best talents to improve the competitive edge. Provision of compensation and benefits ensures the company works within legal frameworks to avert being at odd with its employees who can create an unhealthy relationship and poor performance. Lastly but not least, it is essential for companies to develop and effectively implement different forms of compensation and benefits to ensure all levels of staff within the organization are rewarded accordingly.
References
Adler, H., & Ghiselli, R. (2015). The importance of compensation and benefits on university
students’ perceptions of organizations as potential employers. Journal of Management and Strategy, 6(1), pp. 1-15
Aslam, A., Ghaffar, A., Talha, T., & Musthaq, H. (2015). Impact of compensation and reward
system on the performance of an organization: An empirical study on banking sector of Pakistan. European Journal of Business and Social Sciences, 4(8), pp. 3-10
Gupta, N., & Shaw, J. D. (2014). Employee compensation: The neglected area of HRM
research. Human Resource Management Review, 24(1), pp. 1-4.
Osibanjo, A. O., Adeniji, A. A., Falola, H. O., & Heirsmac, P. T. (2014). Compensation
packages: a strategic tool for employees' performance and retention. Leonardo Journal of Sciences, (25), pp. 65-84.
