Employee Compensation Issues in an Organization

Compensation strategy

The compensation system of an organization is established to accomplish several objectives particularly on the management of employees (Martocchio, 2011). The compensation system of an organization is set up to attract, retain, and motivate employees. To attain these major goals, the compensation system should comply with the regulations that govern the employees’ remunerations. The compensation system should also simplify the administration of employees as well as be cost-effective. The compensation system can only attract, retain, and motivate employees when it is perceived to be satisfactory. Increased compensation of an organization will attract employees with skills and needed competence. As a result, employees are retained and motivated towards attaining the desired goals of the organization.

Essentially, the strategic choice of compensation influences the attainment of the goals of the business. Organizations should adopt a strategic choice that enhances employees’ development and growth. Moreover, the firm should adopt a strategy that upholds the culture of participation and empowerment within the workforce. Also, the organizations should adopt compensation strategic choices that develop the culture of protection and reliability of employees. Most importantly, the compensation strategy should increase the business competitive advantage through a sustainable business approach to development and improvement (Martocchio, 2011).

Haven’t Found The Relevant Content? Hire a Subject Expert to Help You With
Employee Compensation Issues in an Organization
Post Your Own Question And Get A Custom Answer
Hire Writer

Compensation practices

An appropriate compensation strategy is one of the ways through which the competitive advantage of the company can be achieved. The decisions involving compensations should be incorporated within the business processes. The business process of the organization determines the level at which the company goals and objectives are attained (Martocchio, 2011). The compensation design system should be within the business’s processes and one of the factors that contribute to the increased competitive advantage of the organization.

In terms of the compensation design, appropriate remunerations of workers increase the level of their participation that in effect increases their productivity (Martocchio, 2011). Further, suitable levels of employees’ participation strengthen the principles and ideals of the organization. The standards set by the organization directly correlates to the value created. As a result, the company’s competitive advantage is attained through the values created by the organization.

The impact and effect of compensation within an organization

Most modern organizations are recognizing the employees’ compensation as one of the significant practices that increase benefits to the organization. Studies indicate that not only the employees that benefit from such practices but also the organizations (Richards, 2006). On the contrary, most organizations perceive employees’ compensations as being costly. However, the benefits surpass the costs involved. In essence, proper compensation ensures a continuous flow of qualified staff with the required skills and technical competence to keep the organization at the competitive edge. The organizations have to recognize the fact that the qualified staff with the required skills and technical competence is the key driver for their growth and development (Richards, 2006). With the current competitive environment, organizations find it necessary to keep such qualified staff within their workforce. Besides, organizations must remain flexible when it comes to the management of employees’ compensations and benefits.

On the part of employees, increased compensation and benefits ensure augmented productivity due to the satisfaction they receive from such benefits (Weinberger, 1995). Well-compensated employees feel protected from social ills that may affect the work processes, which in turn may result in decreased performance. In other words, compensation and benefits that take into consideration the needs of workers are critical in the general output of the employees. According to Weinberger (1995), there is a direct correlation between appropriate compensation and increased productivity. Essentially, compensation has a direct impact on the employees’ performances

One of the major effects of the forms of compensation is that the employees are motivated to attain greater output. Good remunerations increase the worker’s motivation and job commitment that are translated into high performances. The forms of compensation also enhance the performance culture among the employees and within the organization. However, these forms of compensation can hardly be determined without appropriate measurement procedures (Richards, 2006). In the circumstances where the output cannot be measured, compensations have increased limiting factors (Weinberger, 1995). In other words, compensation should be based on some form of measurable output. The impact of compensation on output can be quantified through the process.

Increased efficiency cannot be divorced from high performance and attainment of the organization’s goals. Appropriate compensation raises performance among workers. The increased performances result from augmented motivation workers gain from appropriate compensation (Weinberger, 1995). The motivation will enhance effectiveness and efficiency among workers that contribute to improved performance. The effect is greater productivity and the attainment of the overall goals of the organization. Generally, the major effect of an appropriate compensation design system is the increased performance, productivity within the workforce, and the general attainment of the organization’s goals (Weinberger, 1995).

From the wider perspective, compensation practices impact the employees’ perception regarding culture and performance of the organization (Richards, 2006). The compensation design system of an organization communicates particular aspects that directly relates to the culture and performance. In particular, the level in which the organization contends for outstanding talent. In other words, the compensation should reflect the employees’ talents, skillfulness, capability, and understanding of the work processes. Besides, the compensation should reflect the reparation levels of other organizations. The organization’s success mirrors the extent of talent and skilled workforce within the organization (Richards, 2006).

The compensation system reflects the level at which the organization recognizes the contributions of individuals, teams as well as groups. Compensation practices such as offering bonuses to individuals with increased performances portray the cultural aspect of the organization that values individualistic ideals. Under such circumstances, the organization will attract those employees with individualistic traits. On the other hand, compensation based on teams’ contribution portrays the collective values of the organization. Individuals that value collective ideals will be attracted to the organization. In general, the compensation system and design communicate the values and beliefs of the organization regarding the performance (Richards, 2006).

Compensation also influences the general employees’ management procedures. The employees’ efficiency and effectiveness can be enhanced through appropriate compensation (Richards, 2006). In this case, appropriate compensation implies that the compensation should be based on the market rate. In other words, suitable compensation that affects the worker’s attitude and motivation should be above the market rate. Effective compensation indicates how the organization values its workers as well as their needs. Besides, effective compensation increases productivity as well as the general performance of the organization (Richards, 2006).

Seniority and merit pay

The seniority pay plans are the process where employee’s compensations are increased based on the longevity in employment. The advantage of seniority pay is that it increases the employees’ commitments to the organization. However, the form of compensation can be detrimental to high performing employees (Dinkin, 2009). On the other hand, merit pay is a form of compensation where the workers’ reimbursements are increased based on performance. The form of compensation is critical for the increased performance of the organization as well as enhanced productivity by the workers. The drawback with the form of compensation is that the firm must undergo additional cost to attain the required performances. The most important determinant factor is the expected output of the workers. Other factors such as the job assignment, the level of motivation, the costs involved as well as the level of competency required are also considered.

Incentive pay plans

The form of compensation that is based on performances. Individuals are motivated due to incentives provided based on performances. Any achievement on the assigned task based on the company objectives is rewarded by the incentive pay plans. The major weakness with an individual incentive pay plan is that an employee may indulge entirely in a personal pursuit of performance goals, which may result in harmful rivalry within the organization (Dinkin, 2009). However, the payment plan can be made effective through an objective assessment of the performances as well as allowing the employee to be in control of the outcome.

Similarly, group-based incentive payment plans are geared towards rewarding members of the team for accomplishing the goals of the organization. The group-based incentive plans can be strengthened through the application of gain-sharing plans. Gain-sharing plans reward group members for attaining group goals that contribute to one particular area of performance such as better customer services. In the IT industry, both individual and group-based incentive payment plans are practiced widely.

References

Dinkin, E. 2009. 5 point plan: Five steps to developing a long- term total compensation plan. Employee Benefit News, 23(6), 32-33.

Martocchio, J. J. (2011). Strategic compensation: A human resource management approach. Upper Saddle River, NJ: Prentice Hall.

Richards, D.A. 2006. High-involvement firms: Compensation strategies and underlying values. Compensation and Benefits Review, 38(3), 36-49.

Weinberger, T.E. (1995). Determining the relative importance of compensable factors. Compensation & Benefits Management, 11(2), 17-18.

MyhomeworkGeeks
Calculate the price of your paper
Pages (550 words)
Approximate price: -

Why Hire a Professional Essay Writer from MyHomeworkGeeks

Quality Urgent Essays

Domyhomeworkk online platform provides the best essay writing service ever received elsewhere, thanks to our professional essay writers. Experience gained in the 10+ years of being in the assignment writing industry is also an added advantage.

Professional and Experienced Academic Writers

A lot is done to maintain us as the best essay writing service provider. Besides owning a degree from a recognized university, a writer must pass the rigorous tests we take them through before they are considered eligible to offer urgent essay help on our website.

Affordable Urgent Assignment Help

Who said a reliable website should not be cheap also? While it is human nature to associate prices with quality, that does not always work. At domyhomeworkk.com, we guarantee you cheap and urgent essay help without compromising the quality.

24/7 Available Urgent Essay Writing Service

Whether it is a ‘write my essay for me cheap’ or ‘edit my essay’ order you want to request, always feel free to reach us at any time of the day. Our experts work in shifts to ensure that you access urgent essay writing services at any time of the day.

Plagiarism Free Essays Online

The punitive measures that come with plagiarized content are so harsh, and we understand that. We consequently ensure to write each client’s papers from scratch no matter how urgent the essay is. To acknowledge borrowed content, our quick writer references and cites the work.

Wow Customer Support 24/7

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

We'll send you the first draft for approval by at
Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

So much stress and so little time? Take care of yourself: let us help you with your tasks. We offer all kinds of writing services.

Essays

Custom Essay Writing Services

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission and Business Papers

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Editing

Editing and Proofreading

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Coursework

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.

Have a homework question? Get help from verified tutors now!