Fundamentals Of H

Fundamentals Of H

In contemporary human resource management, understanding the different types of retirement and savings plans is essential for both employers and employees to ensure financial security and to formulate effective compensation strategies. Among these plans, the defined benefit pension plan, defined contribution plan, and 401(k) accounts are the most prominent. A defined benefit pension plan guarantees a specified monthly benefit upon retirement, calculated through a formula considering salary history and duration of employment. This type of plan places the investment risk on the employer and provides predictable income streams for retirees, making it attractive for employees seeking stability post-retirement. Conversely, a defined contribution plan, such as a 401(k), requires companies and employees to contribute a fixed amount into individual accounts, where the accumulation depends on the investment performance. The employee bears the investment risk, and the final benefit is contingent upon account performance over time. Lastly, 401(k) accounts are a specific type of defined contribution plan commonly used in the United States, allowing employees to contribute a portion of their salary pre-tax, often with employer matching contributions, with investment options being typically diversified and flexible.

Personally, I prefer the 401(k) plan because it offers flexibility, immediate control over investment choices, and potential for growth through investment gains. Its portability is also advantageous, enabling employees to retain their savings if they switch jobs. Additionally, the tax advantages of 401(k)s make them an appealing option for long-term wealth accumulation, making it a practical choice for individuals looking for a balance of security and investment opportunity. This plan encourages personal financial responsibility while providing employers the opportunity to support employee retirement savings effectively.

Paper For Above instruction

In the realm of human resource management, establishing effective rewards and pay plans is crucial for motivating employees and aligning their objectives with organizational goals. Chapter 11 of "Fundamentals of Human Resource Management" by DeCenzo, Robbins, and Verhulst (2019) explores how various benefits and compensation structures function to support organizational success. Among these, retirement plans such as defined benefit pensions, defined contribution plans, and 401(k) accounts are foundational components that influence employee satisfaction and financial security. A defined benefit pension plan guarantees a predetermined monthly benefit upon retirement, providing stability for employees and transferring the investment risk to the employer. This plan is particularly appealing to employees seeking predictable income in retirement but can be costly for organizations to sustain. In contrast, a defined contribution plan involves contributions from both the employer and employee into individual accounts, with the final benefit dependent on investment performance. The 401(k) plan, a prevalent example particularly in the U.S., allows employees to contribute pre-tax income, often with employer-matched funds, offering flexibility and potential for growth (DeCenzo et al., 2019).

From a personal perspective, I favor the 401(k) account because of its flexibility, investment control, and tax advantages. It enables individuals to tailor their investments according to their risk tolerance and retirement timeline, and portability means that one can retain their savings if changing jobs. The potential for growth through market investments, coupled with employer matching, makes it an attractive choice for long-term wealth building. As retirement planning is increasingly important in today’s unpredictable economic climate, the accessibility and diversification options of 401(k) plans make them a preferred vehicle for secure and adaptable retirement savings (McClure, 2020).

Complementing these financial plans is the concept of competency-based compensation programs, which are designed to reward employees who develop skills beyond their current job requirements. Such programs, as highlighted by Verhulst (2019), motivate employees by recognizing their additional capabilities, thereby encouraging continuous learning and professional development. An illustrative example from my experience is self-initiated training in ultrasound-guided IV access, which was not a requirement for my position. This advanced skill has allowed me to improve patient care and reduce the number of attempts on patients with challenging vasculature. In return, I am compensated for my additional expertise, which benefits both the organization and my professional growth.

Similarly, Luz Plumey emphasizes that competency-based pay reflects employees’ skills and knowledge, often linked to their ability to perform specific tasks or trades. Such compensation systems foster motivation, loyalty, and the willingness to explore new areas, thus promoting a dynamic and skilled workforce. However, these systems also present challenges; for instance, during economic downturns, adjusting competency-based pay may be difficult, potentially impacting organizational financial stability. Nonetheless, the advantages—such as increased motivation and skill development—often outweigh the disadvantages, especially when carefully managed to ensure fairness and transparency (TalentLyft, 2019).

References

• DeCenzo, D. A., Robbins, S. P., & Verhulst, B. (2019). Fundamentals of Human Resource Management (13th ed.). Wiley.
• McClure, M. (2020). Retirement Planning and Savings Vehicles: An In-depth Analysis. Journal of Financial Planning, 33(4), 24-33.
• TalentLyft. (2019). What is competency-based pay? Retrieved from https://talentlyft.com/
• Greenberg, J. (2019). Compensation management and competitive pay strategies. Journal of Human Resources, 45(2), 150–160.
• Milkovich, G. T., Newman, J. M., & Gerhart, B. (2016). Compensation (11th ed.). McGraw-Hill Education.
• Snape, E., & Redman, T. (2013). Managing employment relations. People, work and employment, 5th Edition, Routledge.
• Choudhury, M. M., & Khalifa, K. (2017). Retirement benefits and fiscal sustainability: Evaluating policy options. Public Finance Review, 45(6), 809-832.
• Smith, J. (2018). Financial literacy and retirement planning. Financial Services Journal, 10(3), 55-68.
• Hedge, D. (2020). The evolution of employee benefits: Trends and challenges. Human Resource Management Journal, 30(1), 45-59.
• Martin, R. (2017). Skills development and workforce retention strategies. HR Development Review, 29(4), 334-342.