Compensation is considered to be one of the major aspect for the development of the organisation and at the same time it is essential to motivate the employees. It encompasses all the ways to compensate the employees or financially motivate them in order to ensure the employee satisfaction which is pivotal for the organisation (Gupta & Shaw, 2014). Moreover, it can be stated that one of the major aim of compensation is to attract the top talent in order to maximise the profit of an organisation. As a matter of fact, compensation is identified as a reward method that is resembled with the motive to retain the best employees by providing financial motivation to them. Based on this understanding, the purpose of this report is to identify and evaluate the compensation framework in a global perspective. In addition to this, the real time impact of the compensation on employees and employee related union is also came up into the main theme of discussion.
It can be argued that there are different types of stakeholders who are responsible to influence the compensation practice of an organisation. In response to this, employees, line managers or the operation manager, executives, unions and government are identified as the important stakeholders of an organisation. As far as the employees are concerned, their abilities and efficacy are coincided with the compensation planning. According to Conrad (2015) the line managers and the operation managers are responsible in order to evaluate the efficiency of the employees. Besides this, the executives carried out the duty to monitor the skilful activities of the managers. As a result of that it becomes easier for the organisation to assess abilities of all the people and set a compensation strategy accordingly. As a matter of fact, Cassidy, Leth?Petersen and Rotger (2018) opined that the labour unions have a great deal of impact on the planning and implementation of the compensation strategy by an organisation. In this context, it can be seen that the purpose of the unions is to safeguard the interests and ventilating the grievances of the workers and employees. As a result of that the organisations has to respect the claims of the labour unions. The government also plays a significant part in it by influencing the compensation policies of the organisations in accordance with the legal framework existing in the country and international regulation. Legal contributions and considerations are played significantly in course of the process.
Changing nature of the work has a great deal of impact on executive compensation. According to Lee et al. (2016) with the technological breakthrough and the mounting pace in the global competition the organisations are continuously changing the nature of the business. As a result of there are serious changes in the compensation policy as well that is resembled with the process of business orientation of the companies. In addition to this, Chng et al. (2015) ascribed that the investors’ confidence is also played a crucial part in this regard. A bad policy making or lagging in the process of making effective policy will develop scepticism among the investors to invest in the company. Moreover, it can be seen that the effective benchmarking process is also considered to be an important aspect to deliver huge impact on the compensation policy (Pepper & Gore, 2015). In many cases organisations engage the services of compensation consultants for the purpose of benchmarking with market rates. In response to this, the significance of governance is also an important aspect to keep into investigation. The objective of the governance is identified as pertinent in terms of managing a regulatory framework for the development of better compensation outline. It is also associated with the idea of corporate governance.
Theoretically, the role of Union is to some extent make a better world for the labours in terms of meet the interests of the labourers. In this context, it can be stated that monopoly of the unionisation has a drastic impact on the wages. There are both advantages and disadvantages of the unionisation on wage. According to Gittleman and Kleiner (2016) unions impose enormous pressure on the organisation or the government in order to safeguard the interests of the workers. In this context, the advantages of unionisation on wages can be identified in terms of the control and power checks and balance in the international global market. On the other hand, Lee et al., (2016) pointed out that the detrimental impact of unionisation leads to damage of healthy cohesion between the company management and the employees by compelling the organisation to run as the union intends.
As per the research of Shen and Xie (2018) it can be argued that compensation plays a significant part in order to motivate the expatriates. Therefore, it is important to consider the compensation as an useful tool in order to reduce the annual turnover of the expatriate employees. From the empirical research on the US expatriates it can be stated that it is very often the US expatriates quit their jobs in order to get dissatisfied with the given salary. It is considered to be a disadvantage and drawback for a company in failing to retain its expatriate employees. Moreover, a risk factor is also coupled with it. Intense competition in the international market pushed the companies in order to set a lucrative compensation plan in order to retain expatriate employees for future benefits.
The total pay model is a three step model comprised of the compensation objectives including the ethics of the company, policy decisions that is resembled with company objectives for future orientation. Besides this, the final component is referred as the techniques of the payment system (Newcomer et al., 2014). The purpose of this model is to ensure the safety and security of the employee interests by covering up not only the financial benefits that the company is going to provide but also the other aspects as well. Such as factors like vacations and health insurances can be pivotal elements in order to facilitate compensation for the employees.
In the high competition within the domestic market it becomes an important measure for a private organisation to deal with the mind-set of the employees by comparing with other existing organisations. However, at first the company must have a clear perception regarding the desired employee salary and how far they can negotiate with the newly recruited or highly experienced employee on the question of salary statement
(Kilgour et al., 2015). In addition to this, the short term and long term value creation are also important for the organisation to execute a better framework related to the financial compensation to the employees.
It can be argued that the strategic market mind-set puts focus on the situational change of direction that is highly adaptive and flexible for the companies to follow. In this model, there is no fixed compensation policy presented in the organisational activities rather the companies are relied on the situational analysis and makes it effective enough to resolve the crisis.
Conclusion
Based on the above discussion, it can be argued that compensation is considered to be an important aspect for the organisations to deal with the international employee retention. In course of the discussion, the report points out different international model of compensation and tries to find out the efficacy of compensation in the international human resource market. Besides this, understanding the impact of unionisation and retaining expatriates are crucial to pave the way for a strategic advantage for the organisations.
Reference
Cassidy, J. D., Leth?Petersen, S., & Rotger, G. P. (2018). What Happens When Compensation for Whiplash Claims Is Made More Generous?. Journal of Risk and Insurance, 85(3), 635-662.
Chng, D. H. M., Rodgers, M. S., Shih, E., & Song, X. B. (2015). Leaders’ impression management during organizational decline: The roles of publicity, image concerns, and incentive compensation. The Leadership Quarterly, 26(2), 270-285.
Conrad, C. A. (2015). Incentives, risk and compensation schemes: Experimental evidence on the importance of risk adequate compensation. Applied Economics and Finance, 2(4), 50-55.
Gittleman, M., & Kleiner, M. M. (2016). Wage effects of unionization and occupational licensing coverage in the United States. ILR Review, 69(1), 142-172.
Gupta, N., & Shaw, J. D. (2014). Employee compensation: The neglected area of HRM research. Human Resource Management Review, 24(1), 1-4.
Kilgour, E., Kosny, A., McKenzie, D., & Collie, A. (2015). Healing or harming? Healthcare provider interactions with injured workers and insurers in workers’ compensation systems. Journal of occupational rehabilitation, 25(1), 220-239.
Lee, S. W., Choi, B. I., Kim, J. C., Woo, S. B., Park, S., Yang, S. G., & Kim, Y. G. (2016). Importance of air pressure in the compensation for the solar radiation effect on temperature sensors of radiosondes. Meteorological Applications, 23(4), 691-697.
Newcomer, L. N., Gould, B., Page, R. D., Donelan, S. A., & Perkins, M. (2014). Changing physician incentives for affordable, quality cancer care: Results of an episode payment model. Journal of oncology practice, 10(5), 322-326.
Pepper, A., & Gore, J. (2015). Behavioral agency theory: New foundations for theorizing about executive compensation. Journal of management, 41(4), 1045-1068.
Shen, K. N., & Xie, X. (2018). Moving from the developing to the developed: compensation disparities of Chinese expatriates. Asia Pacific Journal of Human Resources, 56(2), 260-285.
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