Analyze the current state of the compensation system and address the compensation of special groups, including executives, unions’ role in compensating the employees, any international compensation, and any other extraordinary compensation elements that impact this organization.
Project – Part B: Pay-for-Performance and Benefits at Merrill Lynch
In a compensation system, benefits and incentives are vital in signaling an employer’s commitment to effectively manage their human capital. In the interests of retaining high performance, group and individual incentives play a strong role in engaging both experienced and novice staff members.
The human resource management philosophy at Merrill Lynch is rooted in ascertaining that its pay structure and benefits system reflect the bigger picture of both monetary and non-monetary motivations for employee accomplishment. Given that Merrill Lynch’s clientele primarily comprise high-net individuals, using a benefits and incentive scheme that integrates the profound responsibilities of the multinational’s team of financial advisors and analysts is vital in effective human resource management.
Current State of the Compensation System
While Merrill Lynch could determine its set of optional benefits, the fiduciary has to abide by legally mandated benefits. Toward that end, performance appraisals and benefits determination processes are of great importance in establishing a promising benefits and pay-for-performance program. At Merrill Lynch, individual and group incentives, performance appraisals, optional and statutory benefits, and the wealth management company’s benefits determination process depict a balanced picture of its overriding compensation system.
Individual Incentives
In its pay-for-performance incentive equation, Merrill Lynch utilizes predetermined t to inspire its top financial analysts and advisors. By using its recognition and rewards program, the fiduciary has ensured that this incentive continues to protect dedicated workers’ feelings of accomplishment (Laby, 2020).
Current State of the Compensation System
More importantly, Merrill Lynch’s leading financial advisors usually get up to 35% on top of their pay grade. To further, incentivize its financial analysts and advisors, the fiduciary firm offers professional development opportunities. Through in-house promotion prospects, for instance, Merrill Lynch indirectly implements its pay-for-performance philosophy.
Additionally, bearing in mind that workers are increasingly considering additional vacation time a priority, Yao (2022) indicated that Merrill Lynch utilizes this incredibly powerful technique by offering extra vacation time to selected financial analysts and advisors who manage over $500 million dollars of investable assets. This approach facilitates the work-life balance of financial analysts and advisors in ways that enhance their proclivity to effectively manage such massive amounts of assets.
Group Incentives
In its group-based compensation scheme, Merrill Lynch offers its financial analysts, advisors, and other staff the fair chance for equal rewards by, firstly, offering on-site health screenings. That way, according to Brown (2018), the work teams at Merrill Lynch could perform at their peak. To further showcase how Merrill Lynch cares for its personnel, Barker (2019) established that the fiduciary offers annual wellness fairs aimed at encouraging the wealth management conglomerate’s staff members to adopt healthy behaviors within and outside their workspaces.
As a part of its group incentive scheme, Merrill Lynch also organizes professional development seminars which bring together hundreds of veteran financial advisors who understand the ins and outs of career development within the financial analysis and advisory sector. That way, the fiduciary seamlessly incorporates the idea of constantly improving personnel’s career prospects into its group incentive system (Andersen et al., 2019). The fiduciary corporation further ascertains that its teams are happy by using the concept of social recognition; in which, the wealth management company’s managers often engage and congratulate deserving work units for their accomplishments.
Performance Appraisals of the Current State of the Compensation System
Given the inextricable link between pay-for-performance and performance reviews, Merrill Lynch uses an actionable evaluation mechanism which is anchored on avoiding anxiety-inducing appraisal. At the simplest level, the fiduciary company’s performance review dives into productivity.
According to Laby (2020), Merrill Lynch regularly determines how its financial analysts and advisors, in particular exceed expectations. This usually includes financial advisors’ proclivity to use innovative techniques for offering financial and estate management services. Additionally, Merrill Lynch’s employee appraisal scheme further entails delving into work ethics.
Therefore, to correctly determine the manner in which its financial analysts and advisors align themselves to organizational values and guidelines, Merrill Lynch assesses the degree to which its personnel stretch the truth when generating their work reports (Barker, 2019). At the abstract level, Merrill Lynch evaluates the construct of customer experience. Thus, the degree of financial advisors’ tendency to maintain calm when faced with seemingly hostile customers is vital in coming up with their customer satisfaction rating.
Legally Mandated Benefits
Given the government’s interest in employee protection, unemployment insurance is a noteworthy statutory benefit at Merrill Lynch. According to Andersen et al. (2019), the fiduciary abides by the government’s interest in protecting workers who lose their jobs unexpectedly. Again, bearing in mind the regulations governing employee illness and injury, Merrill Lynch also offers workers compensation insurance.
Therefore, as Merrill Lynch’s financial advisors, analysts, and other personnel carry out their tasks this benefit ensures that they would continue receiving payment when work-related illnesses and injuries occur. Next, is family and medical leave; in which, Merrill Lynch adheres to the Family and Medical Leave Act (FMLA) to offer paid paternity and maternity leaves for affected workers who have worked with the fiduciary firm for at least one year (Van Hai, 2022).
Optional Benefits
A notable optional available benefit at Merrill Lynch is that of certification and tuition reimbursement. To solidify its HRM activities, Merrill Lynch offers this benefit on a case-by-case basis. The wealth management multinational also offers paid vacation. Notably, according to Barker (2019), the paid holiday benefits package primarily targets high-caliber staff members whose motivation levels are of prime importance in the attainment of the fiduciary’s overriding long-term goals. Additionally, Merrill Lynch offers disability insurance as an optional benefit. This benefits seeks to install a strong sense of motivation about the fiduciary company’s tendency to prioritize its staff members long-term interests.
Benefits Determination Process-Current State of the Compensation System
Bearing in mind the changing needs of a typical labor force, Merrill Lynch utilizes a benefit determination process which starts with pinpointing the fiduciary’s budget, on the one hand, and objectives of instituting a benefits program, on another one hand. Given that Merrill Lynch seeks to ameliorate its clients wealth management strategies, the corporation comes up with its benefits scheme by estimating how its available benefits budget would facilitate it to attain its clients-focused corporate objectives of the Current State of the Compensation System
Next, is benefit needs assessment, which according to Rana (2018), focuses on workers’ perceptions of benefits. Afterwards, Merrill Lynch formulates a benefits scheme which takes into consideration important needs assessment outcomes in ways which ensure a sense of reasonable cost-containment. As a constituent of the benefits determination process, Barker (2019) indicated that Merrill Lynch carries out periodic benefits evaluation aimed at fixing lapses in the earlier phases of the benefits determination process.
Conclusion
At Merrill Lynch, the right perks matter. From a critical perspective, the benefits and incentives which the fiduciary offers to its financial analyst and advisors reflect the fiduciary’s attempts to ensure its pay-for-performance scheme is commensurate with its financial analysis and advisory teams’ professionalism. It would be instructive to note that all the optional and statutory benefits at the fiduciary conglomerate lean toward meeting employee interests given that certain types of benefits focus on staff members’ personal-level needs.
Notably, while there is a plethora of benefits which are not required by law, Merrill Lynch deems it necessary to offer optional benefits on the account of its internal corporate citizenship policies targeting its personnel. With the priorities of the Merrill Lynch’s benefits determination process in mind, it would be helpful to note that the wealth management corporation’s benefit assessment process has played a substantial role in reducing the benefits differential within its compensation system.
References
Andersen, L., Duffie, D., & Song, Y. (2019). Funding value adjustments. The Journal of Finance, 74(1), 145-192.
Barker, Z. (2019). Socially Accountable Investing: Applying Gartenberg v. Merrill Lynch Asset Management’s Fiduciary Standard to Socially Responsible Investment Funds. Colum. JL & Soc. Probs., 53, 283.
Brown, S. L. (2018). Mutual Fund Advisory Fees: An Objective Fiduciary Standard. U. Pa. J. Bus. L., 21, 477.
Laby, A. B. (2020). Advisors as fiduciaries. Fla. L. Rev., 72, 953.
Rana, R. S. (2018). A Modelling Value-at-Risk in investment banks: †œEmpirical evidence of JP Morgan, Merrill Lynch and Bank of Americaâ€. Journal of Global Economy, 14(2), 146-169.
Van Hai, T. (2022). Development Of Investment Banking Model In Capital Market. Journal of Positive School Psychology, 6(8), 5856-5867.
Yao, Y. (2022). Analysis of Financial Crisis Influence on the Investment Banks of Wall Street. In 2022 7th International Conference on Social Sciences and Economic Development (ICSSED 2022) (pp. 950-954). Atlantis Press.