Analyzing Compensation and Benefits Chapter

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Toyota Company is the world's largest automobile manufacturing company in the world. Similar to what their vision states about being the most respected and successful car manufacturer in the world, the company has achieved that objective. With its headquarters in Japan, the Toyota Company has several branches around the globe. It is not surprising that the company employs hundreds of thousands of employees because of its huge size. The fact that the company employs such a high number of employees also means that it equally has a responsibility to take care of that many employees to guarantee high performance. One of the most important responsibilities of any organization is to fairly remunerate its staff, if they are to ensure better results. Once an organization creates employment opportunities, it then becomes its responsibility to make sure that all the talent and work put in is adequately compensated (McHugh & Nickels, 2008). Studies have proven that proper staff motivation accounts for a significant proportion of an organization's growth and success. The Toyota Company has heavily taken advantage of the findings of this study. The company has continuously and fairly rewarded its employees through monetary compensation and various benefits. As a result of being properly motivated, the employees of Toyota Company have worked tirelessly to make the company the world's most successful automobile manufacturing company. Not only has the hard work benefitted the company, but also the returns they have earned the company, have enabled it to give them training opportunities and other benefits that have contributed to their personal growth. This paper discusses the benefits of an organisation properly rewarding its employees at various levels of the organization.

Compensation

According to the Human Resource Guide (2015), (Shilling, 2015) compensation refers to a systematic approach to offering monetary rewards to staff in return for work done. Therefore, compensation is basically a reward for a certain job done by an employee. It can also be a reward for a job or a task done voluntarily. In our case study, the organization chosen, i.e. the Toyota Company, defines compensation as monetary reward for staff in various levels of the company hierarchy, either for job satisfaction or performance, or both. Since compensation can be utilized as a tool to motivate employees so as to encourage better performance, it can be tailored so as to be a driving force to meet an organization's goals. (Maslow, 1943)

Benefits

According to the Business Dictionary (Business Dictionary, 2015), a benefit is a financial compensation, a right, a privilege or an advantage given to one by another. The Toyota Company gives its employees numerous benefits for the sole purpose of motivating them. Some of the benefits provided by the Toyota automobile company include: travel allowances, pension schemes, motor vehicle purchase discount, life insurance, and medical insurance, among many more. Although these benefits differ in amount, depending on the workstation of the employee in the organization, they are a very effective strategy of motivating employees to work well, which in turn increases a company's performance.

General Compensation Structures

So as to effectively reward its employees, Toyota's human resource department has been utilizing several predefined structures with the aim of calculating what is adequate for each category of employees. These predefined elements include all the benefit and compensation packages, such as retirement plans, paid time-off leave, health plan, salaries and allowances. To arrive at the general compensation structures one has to take the following three key steps:

Step 1 (Define)

Toyota first has to describe all the compensation elements. This entails: defining both valid and null compensation; which employee category receives certain compensation packages and which doesn't; and by what means are rewards shared or a certain benefit given to all employees. Will monetary compensation be by cash or through bank cheques? (U.S. office of Personnel Management: 2011 Salary Tables and Related Information) These compensation elements need to be in line with the federal and state laws on employee remunerations. After defining all these elements, the next step is to administer.

Step 2 (Administer)

After defining every compensation element, the Toyota Company has to administer or give the rewards or packages. In other words, this step entails making benefits and monetary compensation entries on every staff's file. The information that is to be captured in the file also include: the time clocked, the deductions to be made and the net income. This step is best done via proper record keeping practices through the use of software and backing up data in separate locations.

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Maintenance of the integrity of such files should be a priority.

Step 3 (Process)

This step entails calculating the earnings and the deductions on a payroll. As a top-tier company, Toyota accountants have access to the latest most effective computer software that help in producing accurate payrolls. Thus, the company can easily dispatch net earnings to each employee's bank account after meeting these three steps.

Formal and Informal Discipline Policy

Maintaining discipline is necessary for the success of any work environment. Discipline is also crucial for strong work ethic, and Toyota is focused on maintaining discipline within its ranks. There are several informal and formal ways of making sure that the staff remains disciplined in their workstations. Toyota Company, via its human resource department, makes use of Malsow's hierarchy of needs model. In this model, each employee is assessed individually on the hierarchy of the following needs: self-esteem levels, love, physiological response, safety, and self-actualization. In following Malsow's model, the Toyota Company is able to get a clear perspective on which level of needs each employee needs most motivation in. Motivating a person in the level that they have the most need provides the best results in terms of motivation. As Maslow (1954) noted, an individual is motivated by her own needs. Motivating an employee at his point of need means that he will be able to perform better at work. Maslow in his work, presented a pyramid of needs to better explain his hierarchy of needs concept. He explained that when an individual feels completed on one level, he or she works hard to move on to the next one, and then the next one. Constantly satisfying employees' needs enable them to work harder so that they can have other of their needs satisfied. Toyota has integrated such a motivational framework based on Maslow's model. Their company's framework motivates employees by ensuring that monetary compensation and other benefits are delivered on time. Moreover, the Toyota Company, as mentioned before, identifies the needs of the employees and then helps them to meet their needs so as to enable them move to the next level of the pyramid. However, despite the good compensation structures, there are a couple of instances where incidences of indiscipline occur. This is not surprising for a company as big as Toyota. The company's informal policy includes interviewing the employees so as to find the source of indiscipline. In a company with a huge and diverse workforce like Toyota, it is crucial to curb and remove sources of organizational indiscipline before such indiscipline spreads and grinds things to a halt. Where possible, the necessary steps should be utilized to solve issues on an informal basis, rather than taking issues through a formal channel (Kenrick, Neuberg, Griskevicius, Becker & Schaller, 2010). Depending on how effective the interviews would be in resolving the issues and the organization's overall informal policy, Toyota will then take steps which include employee suspension or even termination of contract.

Informal Procedure and Action

Company laws are largely responsible for the utilization of informal procedures to deal with indiscipline cases or other issues of minor misconduct (Huitt, 2007). The Toyota Company behaves this way. The line manager is the one who is responsible for taking action, since he or she is in constant direct contact with the employees, most of the time. Without any fear or favour, the manager should monitor the employees to check for any cases of indiscipline among his or her employees, such as constant absenteeism without notice, use of foul language, carelessness when handling company property, fighting, etc. After identifying the cases, the line manager should then inform the employee of the misconduct he or she has been found to have engaged in. This is done in complete confidentiality. The manager should also inform the employee of what specific action of theirs constitutes misconduct and what is expected of them according to the organization's rules and regulations, and the employee's employment contract. The fact that this conversation is held away from other employees in absolute privacy enables the line manager to get feedback from the employee. After notifying the employee, the manager will then conduct investigations. This step is a must, and the Toyota Company takes it very seriously. After investigations, the outcome helps determine whether any punitive actions will be taken or the case should be dropped. If the investigations prove that the employee has violated a company regulation, then plans are made for a.....

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