COMPENSATION AND BENEFITS Executive Summary The Toronto-Dominion Bank has become a multinational Canadian banking firm that provides financial goods and services.The firm was established in 1855 and had its headquarters in Toronto, Canada. It operates across divisions of Canadian Retail, American Retail, and Wholesale Banking. TD Bank has massive, close to 19 million clients assisted by more than 2400 branches in Canada and the United States. TD Bank works with a vision of "being the best bank" through a best managed, client-focused, an integrated financial company with a distinctive and diverse culture of employees. The operating hours of the Bankrange between 15 hours and 30 hours. TD Bank has a structured strategy for recruiting, maintaining,andempoweringhigh-performingworkersandaunionclimateforthe workforce (TD Bank, 2019). TD Bank is competent enough torattle out some of the keychallenges thatbanking sectors usually have to face, such as lowloan growth, the weak Canadian economy, and drops in commodity prices (Campiglio et al., 2018). TD Bank provides its customers unique advantages such as; personal loans and credit cards, home equityloans,mortgageloans,investments,anddepositsinoneconvenientspot. Furthermore,the well existing position of TD Bankin Canada and strongbrand awareness are its leading competitive advantages throughout the banking industry (TD Bank, 2019).
COMPENSATION AND BENEFITS Workforce Summary Statista (2020) shows that TD Bank engaged a workforce of 89,031. In 2020, TD Bank has been listed as among the Top 100 Employers of Canada. The mean age of TD Bank workers is typically 25 years, and the average tenure is almost 6.3 years for all workers (TD, 2015).According to the new Talent Development Capability Model, TD professionals require interpersonal skills, together with professional expertise to develop successful team culture, engagement, trust, and confidence in the organization. Moreover, successful TD now embraces employees having a business-partner and proactive approach to predict and adapt evolvingneedsinordertocreateacompetitiveadvantage(ATD,2020).Strategic management refers to defining the purpose of the company as well as the strategies and actions for achieving that objective (Emeagwal & Ogbonmwan, 2018).Management's strategic policy of TD Bank is to stand out with a distinct mark from its competitors and give trust to its consumers, societies, and employees to succeed in an evolving world. Workforce demographics such as age, expertise, and employee experience make a significant impact on the organizational design of compensation strategies (Agyeman & Ponniah, 2017). TD Bank has developed innovative incentive plans to recruit, retain, and reward employees while holding its demographics in mind. Compensation Analysis The compensation mix is the fixed wage-to-variable wage ratio. The first reflects the base pay, and the latter depicts the target reward. Base pay is the actual wage paid to an employee, without bonuses, benefits, or raises. It is the pay rate which an employee earns in return for services. Indirect compensation applies to all components of remuneration that are made in addition to the minimum wage, like health insurance and pensions. Furthermore, merit pay refers to the pay when an employee is awarded for his performance by making a
COMPENSATION AND BENEFITS permanent raise in his base salary (PayScale, 2020). There are usually three levels of a company that includes the CEO, salaried workers, and hourly staff. Inthesameway,TDBankincludesthreelevels,whilesomeseparatework descriptions fall under these levels. Titles like Manager, Senior Manager, IT Architect, and Director represents salary employees. On the other hand, the Credit Analyst, Customer service representative, Teller, Assistant Head Teller, Banking Specialist, and several other job titles fall under hourly-worked workers. TD Bank compensates its workers for the base salary according to their job titles. Similarly, indirect and merit compensation is often contingent on various factors, such as their level of performance (TD Bank, 2018). Moving into the base pay compensation mix, it is found that most TD Bank workers are paid according to well-defined salary levels. The compensation mix of the CEO is calculated on the basis of the attainment of defined results, i.e., efficiency of the bank. The annual base salary of the CEO in 2019 was $1.4 million (The Canadian Press, 2020). The highest paying staffs of TD Bank are Directors earning $200,000 per annum, and lowest- paying employees are Developers earning $53,000. Average TD Bank hourly base pay varies for Data Entry Clerk from around $12.26 an hour to $83.72 an hour for Senior Project Manager (Emolument, 2017). TD does not keep a paycheck and is paid biweekly to all its employees. Indirect compensation includes up to 16 weeks off maternity/paternity leave to both parents. Similarly, paid-time-off up to 6 weeks, health insurance, and several workplace discounts on goods, events, and other attractions are offered to every employee. Moreover, on the basis of their growing skills and productivity, merit pays given to employees in the form of increment in their base salaries. TD Bank, without requiring employee contributions, offers 2 to 6 percent of earnings to each employee in the form of retirement benefits (Fechter, 2019).
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COMPENSATION AND BENEFITS Compensation and benefits at TD Bank represent a large portion of the overall compensation provided to workers in return for their time, energy, efforts, and performance (Emeagwal & Ogbonmwan, 2018). TD Bank teaches and motivates its workers to understand better the actions that will lead them to their success targets and execute them accordingly. TD Bank usually defines performance goals in five classes, including business, customer, financial, community, and employee. Such metrics are used to measure success, which has a direct influence on compensation. To assess the effectiveness of the compensation scheme and employee engagement, TD Bank performs market research each year to ensure that its services are successful within the market (Geraghty, 2016). Besides that, performance metrics are a crucial way for managers to clarify their staff what is essential. In addition, metrics are not only crucially important for a successful compensation program but also for leading the company effectively in the long-run. Thus, over time, TD Bank may add new matrices to ensureemployeesaresufficientlycompensatedforachievingdesirablecompetitive advantages.TDBankmayalsointroducenewprogramsandwaystomeasurethe effectiveness of existing compensation strategies as well as the motivation and satisfaction of employees from those measures (Sammer, 2017). Compensation Strategy and Alignment with the Business Strategy The strategy is corporate commitment, aimed at achieving long-term goals, as well as thedevelopmentofaplanofaction.Strategiccompensationisahumanresources management strategy that managers use to recruit, retain, and develop skilled employees by harmonizingtheirattitudesandworkperformancewiththeorganizationalobjectives (Emeagwal & Ogbonmwan, 2018). Compensation strategy does have significant positive effects on increasing employee efficiency and boosting overall organizational performance. Compensation strategy improves employee engagement, maintain recruiting competitive edge, ensure legal enforcement, improve employee satisfaction, and boost productivity
COMPENSATION AND BENEFITS (Lippel, 2018). Therefore, the compensation strategy is essential throughout all personnel levels, i.e., from the upper to the lower employees (Emeagwal & Ogbonmwan, 2018). The compensation strategy is usually designed in a way to attract competent and experienced candidates in order to fill vacant positions in the organization. Large companies often put their efforts to grasp a comprehensive understanding of various legal laws to design effective compensation strategies (Long, 2016). The performance metrics of TD Bank demonstrate that achieving or failing to achieve the performance metrics goals has an impact on the overall funding levels of different compensation plans of banks. Since TD Bank needs unique skills in its employees in order to achieve a competitive advantage and to raise profits quicker than expenses, the compensation plan of TD Bank gives its workers wide-ranging incentives to retain, empower and grow them. After the compensation system has been implemented, TD Bank tests employee satisfaction and productivity through constructive feedback and various programs. Following this, TD Bank asks staff to make some constructive recommendations for change (Sammer, 2017). This helps TD Bank to analyze, which motivational needs such as physiological, safety, social, self-esteem, or self- actualization needs are being met through a structured plan for compensation. Consequently, when employees, after the implementation of compensation strategies, will produce desired effective outcomes that show alignment with organizational objectives, then it will ensure TD Bank the importance of compensation for employee engagement (Geraghty, 2016). Compensation Strategy Recommendation A skilled-based pay system seems to be less advantageous for TD Bank, which provides financial products and services, as this pay system makes industry comparisons challenging, and would also force the organization to keep a record of all the skills that each employee possesses (Dierdorff & Surface, 2017). Similarly, a time-based pay system would
COMPENSATION AND BENEFITS also be less effective for TD Bank, as it encourages loyalty to the company because promotions and salary raises are dependent on the duration of time of individual employees with the company. The cons of this system outweigh its pros. This compensation system, for example, suggested that success does not really matter, which in effect, would encourage top- performing workers to pursue jobs in other businesses that will appreciate their contribution (Long, 2016). Holding these points in mind, the dimension of indirect pay and merit pay in the current compensation policy of TD Bank is very successful because they compensate their workers on a fair marketing and performance-based basis. In addition, TD Bank provides merit-based and not connection-based opportunities (Fechter, 2019). Similarly, it is another positive practice of TD Bank to collect feedback from workers about payment plans. Employees in TD Bank are mostly paid in monetary terms (Fechter, 2019). In addition to cash, however, workers are also often inspired by other types of acknowledgment and incentives. Consider, for example, setting up an annual trip to reward workers who have accomplished those annual targets is quite effective for increasing both motivation and teamwork. This change in the incentive program wouldfurther strengthen consistency between the compensation policy and the business strategy. Certain non-cash benefits may include special training opportunities, mentoring opportunities, achievement appreciation ceremony, or discounts on gym memberships. Non-cash award programs often work much better than cash and reinforce corporate values and traditions, improve collaboration, enhance customer loyalty, and encourage particular behaviors among other initiatives (Schweyer, 2018).TD Bank would be able to determine the efficacy of non-cash incentives by daily monitoring and evaluating reviews from a broad range of personnel. Change Factors In exchange for their job performed for the company, the compensation is the monetary and non-monetary incentives offered to the employees. TD Bank gives its workers
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COMPENSATION AND BENEFITS benefits in the form of bonuses and wages (Fechter, 2019). There are many internal and external factors influencing an organizational change in its compensation policy. Internal variables reside within the company, which influence the organizational pay structure. On the otherhand,externalvariablesexistoutsidethecompany,whichsomehowinfluence workplacecompensation.Abusinessstrategy,financialdifficulties,turnoverrate,and employee satisfaction are some internal factors.Some external factors include the labor market, labor unions, and labor laws, which may influence/* workplace compensation plans (Torre et al., 2015). TD Bank currently faces no major challenges in terms of turnover, financialdifficulties,unionizationconcerns,strainedmanagementandemployee relationships, decreasing rates of satisfaction or engagement, or any business loss. The justification for this statement is that TD Bank is the 26th largest bank in the world with such clear and efficient compensation policies that retain, inspire, and engage workers enough to comply with organizational policies (TD Bank, 2018). Consistent changes in compensation policies, however, may also help TD Bank to overcome any potential challenges. Compensation Strategy Placement Before designing a pay system, an organizational compensation theory contrasts its internal salaries to outside rivals. In this way, a business may lead the market by paying higher wages, and paying lower wages may lag the market, or can reflect the market average. Nevertheless, TD Bank does not offer a number of non-cash incentives. Still, along with other attractive indirect and merit payments, it offers its employees highly competitive wages, which makes it very competitive (PayScale, 2018). Thus, from the comprehensive analysis of the compensation strategy of TD Bank, it can be stated that TD Bank is placing as a leading company in the Canadian banking industry.
COMPENSATION AND BENEFITS References Agyeman, C. M., & Ponniah, V. M. (2017). Employee demographic characteristics and their effects on turnover and retention in MSMEs.International Journal of Recent Advances in Organizational Behaviour and Decision Sciences,1(1), 12-29 [Print] ATD. (2020, February). Competency Out, Capability In. Retrieved from https://www.td.org/magazines/td-magazine/competency-out-capability-in [12Apr. 2020] Campiglio, E., Dafermos, Y., Monnin, P., Ryan-Collins, J., Schotten, G., & Tanaka, M. (2018). Climate change challenges for central banks and financial regulators.Nature Climate Change,8(6), 462-468. Retrieved from https://www.nature.com/articles/s41558-018-0175-0/[12 Apr. 2020] Dierdorff, E. C., & Surface, E. A. (2017). If you pay for skills, will they learn? Skill change and maintenance under a skill-based pay system.Journal of Management,34(4), 721- 743 doi:https://doi.org/10.1177/0149206307312507 Emeagwal, L., & Ogbonmwan, K. O. (2018). Mapping the perceived role of strategic human resource management practices in sustainable competitive advantage.Academy of Strategic Management Journal. 17(2) [Print] Emolument. (2017, February). Average salary of TD Bank employees. Retrieved from https://www.emolument.com/salary-reports/companies/td-bank/9978 Fechter, J. (2019, November). TD Bank Employee Benefits Review: Are Their Careers Worth It? Retrieved fromhttps://futurefuel.io/employee-benefits/td-bank-careers/ Geraghty, S. (2016, April). How to Measure the Impact of Employee Rewards on Performance. Retrieved fromhttps://www.talkdesk.com/blog/how-to-measure-the- impact-of-employee-rewards-on-performance/
COMPENSATION AND BENEFITS Lippel, K. (2018). Preserving workers' dignity in workers' compensation systems: an international perspective.American journal of industrial medicine,55(6), 519-536. doi:https://doi.org/10.1002/ajim.22022 Long, R. J. (2016). Pay systems and organizational flexibility.Canadian Journal of Administrative Sciences/Revue Canadienne des Sciences de l'Administration,18(1), 25-32 [Print] PayScale. (2018, April). Lead, match, or lag: how your relative pay positioning affects your recruiting. Retrieved from https://www.payscale.com/compensation-today/2018/04/relative-pay-positioning PayScale. (2020, January). What are the different types of compensation? Retrieved from https://www.payscale.com/compensation-today/2020/01/what-are-the-different-types- of-compensation Sammer, J. (2017, January). Measuring for Success: Choose Incentive Metrics Wisely. Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/incentive- metrics-choice.aspx Schweyer, A., Landry, A. T., & Whillans, A. (2018). Establishing the intangible, non- financial value of awards programs.Incentive Research Foundation. Statista. (2020, April). Number of employees at Toronto-Dominion Bank from 2013 to 2019. Retrieved fromhttps://www.statista.com/statistics/461011/employee-headcount- toronto-dominion-bank/ TD Bank. (2018). TD Approach to Compensation. Retrieved from https://www.td.com/document/PDF/corporateresponsibility/2018-TD-Approach-to- Compensation.pdf
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COMPENSATION AND BENEFITS TD Bank. (2019). Explore TD Bank products and services. Retrieved from https://www.td.com/us/en/small-business/ TD. (2015). Corporate Responsibility Report 2015. Retrieved from https://www.td.com/corporate-responsibility/crr-2015/employees/employee-profile/ index.jsp The Canadian Press. (2020, March). TD Bank Group chief executive's total compensation down in 2019 from 2018. Retrieved from https://www.thestar.com/business/2020/03/02/td-bank-group-chief-executives-total- compensation-down-in-2019-from-2018.html Torre, E. D., Pelagatti, M., & Solari, L. (2015). Internal and external equity in compensation systems.Human Relations,68(3), 409-440 [Print]