During the early years of employee based compensation, employers and mangers focused on a one shoe fits all approach when it came to employee benefits and compensation. Strategies were based on what the company could afford and no effort was made to distinguish themselves from others. Employees had few options, if any, when it came to choosing their benefits package and often time's practices were based on formulas that served the entire employee population in an organization (WolrdatWork, 2008).
In the 1970s and 1980s, organizations first began to realize that implementing a comprehensive and creative total reward strategy could potentially put them ahead of other employers and give them an advantage in attracting and retaining the best employees. When deciding what to include in their benefits package, employers were responding to rapidly changing environment, including:
1970's and 1980's
Global economicdevelopment and the emergence of multinational firms
•A much morecompetitive business environment
•Diversification of thework force to include workers who didn't fit the sole breadwinner,
head-of-household model of the '50s and '60s
•New government mandates related to employee benefits
•Rapidly risingbenefits costs that prompted flexibility in programs to reduce costs
After the relatively simple compensation and benefit programs were implemented, more creativity, and consolidations was required by employers. The 90’s and 2000’s brought along a whole challenges for employers to consider.
1990's and 2000's
•Dramatic changes inthe workplace, including increased awareness of conflicts caused by family,
home and work demands.
•Workforce demographicchanges that challenged the traditional working-father, stay-at-home-mother model of previous decades.
•Fewer resources available for pay increases.
•Astronomical increases in health-care costs in some countries.
•Rapid decline of defined-benefit pension plans as a financially viable retirement model.
•Tremendous advances in technology and the emergence of new business opportunities.
•Geographic movement of many manufacturing and service roles.
•Advancement of pay-for-performance practices.
•Unprecedented mergers, acquisitions and global competition
As the world becomes more technological advanced total reward will continue to grow and become more complex. It is important that organizations keep up with a rapidly changing environment to make sure they do not fall behind.
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