Human Resources Essay, Research Paper

Recognize individual achievements

Reward team productivity

Compensate employees for the acquisition of new skills

Remain competitive with its salary structure.

AAL has 15 service teams, organized geographically, that perform all

services necessary for the company’s insurance products. For example, a

team, comprising 25 employees, can underwrite a policy, pay a claim, change

beneficiaries and modify coverage levels. Furthermore, team members can

provide these services for any product, be it life insurance, health or

disability insurance.

Before developing the team structure in 1987, the company had organized

these services functionally, according to the type of product. Service

requests traveled from unit to unit, increasing the amount of time needed to

service a customer, and boosting the chance for errors.

“By moving to teams, we were challenging employees to see the whole job,

rather than just the piece they performed individually,” explains Jerry

Laubenstein, vice president of insurance services. “But we also wanted them

to learn additional jobs that could help the team as a whole, and we wanted

the team to find ways to boost its overall performance.”

To promote all of these changes, AAL revamped its compensation structure

completely to include four main elements.

A skill-based pay program:

The company has implemented a skill-based pay system that compensates

individuals for each additional skill they acquire in an effort to help the

team. As one of the first organizations to implement skill-based pay for

white-collar workers, AAL developed a dictionary that describes all the

services performed by team members and lists their associated dollar value.

Employees are paid a base wage for the primary service they perform, and

they can receive incremental pay increases for each service added to their

repertoire of skills.

A team-incentive program:

AAL has implemented a team-incentive program through which the entire team

is awarded an annual bonus based on three factors:

Productivity

Customer satisfaction

Quality of work.

This team incentive can be worth as much as 10% of an employee’s annual

compensation.