The modern day organizations are observed to face the issues of employee demotivation in a significant manner due to the considerable amount of work pressure that the employees are facing. Under such condition the proper rewarding policy has great significance for the organizations. The paper is focused in specifying the different attributes of the compensation programs.
1.1 Key Goals of the Compensation Strategy
The modern organizations are observed to create the compensation strategy with precise focus on 5 different points which are mentioned below:
Talent Acquisitions:
The organizations are observed to structure their compensation strategy in such a manner that they be able to attract the top quality individuals or talents for their organization. This helps the organizations to process their business operation through the best quality employees.
Retention and Rewarding Personnel:
The second motive for the compensation strategy is the retention of the employees for the service for a longer period of time. One of the primary function of the compensation strategy is the rewarding for the recognition of the good work that an employee conducts. This motivates the employees to increase their quality and the tenure with the organization (Adeoye & Fields, 2014).
Maximization of the Return on Investment:
The organization’s prime objective for an effective compensation strategy is the higher rates of return on Investment. The organizations are in need to make sure that they be able to come up with such a compensation strategy which will trigger the employees to increase their workload and at the same time it will enable them to provide the utmost quality in their operations.
1.2 Impact of Compensation System:
Several organizational surveys are able to confirm that the modern organizations are subjected to significant amount of work pressure and it is also observed that the employees under such situations are getting dissatisfied and frustrated with their jobs. The introduction of the effective rewarding policy into the compensation system is significant in this case as the employees are able to get motivated (Terera & Ngirande, 2014). The rewarding policy includes both sets of rewards that is the intrinsic and extrinsic so that the employee’s concerns of the various non-financial aspects is taken care along with the financial aspects. On the other hand, a not so effective rewarding policy which is not able to offer much financially and non-financially to the employees along with the improper and inadequate recognition of the employees will be instrumental in demotivating the employees.
Maslow’s Hierarchy of Needs and Intrinsic and Extrinsic Rewards:
|
Levels |
Intrinsic |
Extrinsic |
|
Physiological Needs |
Office Quarters |
Accommodation Rents |
|
Safety Needs |
Quarterly Health Check ups |
Performance Bonus (Einstein, Addams & Roosevelt, 2016) |
|
Social Belonging |
Outdoor Tours |
Tour Vouchers |
|
Esteem |
Renowned Club Memberships |
Luxurious Cars |
|
Self-Actualization |
Promotion to higher levels |
Increment in Salary |
1.3 Pay Mix:
Pay mix is a ratio of the On-Target Earnings considered as Base Salary to the On-Target Earnings considered as target incentives (Merriman et al., 2016).
Internal Factors that affect the pay mix:
The worth of a particular job.
The relative worth of an employee.
The capability of payments from the part of the employers.
Job Evaluation.
External Factors:
The situation of the Labour Market.
The wage rates of a concerned area.
The cost of the living with a precise focus on the inflation.
The ability of collective bargaining.
1.3.1 Impact of Inflation on the increment of the pay rates:
The impact of inflation is significant in increasing the pay rates. Each and every society is observed to face the effect of inflation at a point of time when the market behaves abnormally. Under such condition the way of living for the employees gets affected and their purchasing power gets decreased. In such cases, inflation is able to increase the pay rates upward periodically.
1.3.2 Method for evaluation of the achievement of the compensation strategy:
The best method to evaluate whether the compensation strategy is working well for the employees or not is the conduction of the survey among the employees of the organizations. This will make sure that the organizations have the idea of the level of satisfaction that the compensation system is able to generate. Along with that, the analysis of the financial statements of the organization will be significant from the part of the organization in order to assess the excellence of the compensation strategy.
1.4 Job Evaluation:
It is a process for the determination of the value or worth of a job compared to the other jobs of an organization (Thierry & de Jong, 2013).
Differences:
|
Methods |
Advantages |
Disadvantages |
|
Job Ranking System |
It is the simplest format among all the available methods and is significantly suitable for the small scale businesses |
Many critics of the system considers that the development of the rankings is difficult in large and complex organizational context. |
|
Job Classification System |
The mentioned system is significantly easy for the employees to understand. |
The method is incapable in stating the smaller differences among the various different grades and roles. |
|
Point System |
The identification of the key jobs is notably easy in this method. |
The mental demands of a job has great detrimental impact in this method. |
1.5
1.5.1 Human Resource Managers’ Salary:
The modern organizations are facing the significant need of following the business operation in a scientific way. In order to do so, the organizations are able to experience the requirement of an efficient human resource manager. The modern day organizations are facing a sharp rise in the salaries of the human resource managers due to the significant amount of need of them in the market. According to Aswathappa (2013), the current market value of the human resource managers is 73000 Canadian dollars. Chelladurai & Kerwin (2017) stated that a human resource manager in Canada gets 71142 Canadian dollars. Albrecht et al. (2015), is able to confirm that the human resource managers in the Canada is get 71000-74000 Canadian dollars as compensation on an average.
|
Levels |
Price (In Canadian Dollars) |
|
Entry-Level |
56940 |
|
Mid-Level |
72270 |
|
Experienced |
91980 |
1.5.2 Pay for Performances:
It is a method for the employee payment that significantly connects the compensation along with the quality of the work (Štangl-Šušnjar & Berber, 2014).
Incentive Rewards:
Joining Bonus:
The modern business market is significantly facing the need of the efficient human resource managers and under such situation, the joining bonus for the managers will be significant to attract. The managers get a onetime compensation for choosing the company for his service in these cases.
Loyalty Bonus:
The competitive business market is able to create such an atmosphere where the retention of the employees is significantly difficult. In order to resolve this issue, the introduction of the loyalty bonus will be a great proposal. This will make sure that the managers get something as recognition for their prolonged association with the concerned organization.
References
Adeoye, A. O., & Fields, Z. (2014). Compensation management and employee job satisfaction: A case of Nigeria. Journal of Social Sciences, 41(3), 345-352.
Albrecht, S. L., Bakker, A. B., Gruman, J. A., Macey, W. H., & Saks, A. M. (2015). Employee engagement, human resource management practices and competitive advantage: An integrated approach. Journal of Organizational Effectiveness: People and Performance, 2(1), 7-35.
Aswathappa, K. E. M. A. L. (2013). Human resource management: Text and cases. Tata McGraw-Hill Education.
Chelladurai, P., & Kerwin, S. (2017). Human resource management in sport and recreation. Human Kinetics.
Einstein, A., Addams, J., & Roosevelt, E. (2016). Maslow’s hierarchy of needs.
Merriman, K. K., Turner, L. A., Galizzi, M., & HaynesBaratz, M. (2016). Pay mix policies as (dis) incentives in motivated job choice decisions. Translational Issues in Psychological Science, 2(2), 184.
Štangl-Šušnjar, G., & Berber, N. (2014). Incentive pay and performances of organizations: A research on the basis of the Cranet data in Europe. Anali Ekonomskog fakulteta u Subotici, (32), 73-88.
Terera, S. R., & Ngirande, H. (2014). The impact of rewards on job satisfaction and employee retention. Mediterranean Journal of Social Sciences, 5(1), 481.
Thierry, H., & de Jong, J. R. (2013). Job evaluation. In A Handbook of Work and Organizational Psychology (pp. 175-194). Psychology Press.
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