In: Business and Management

Submitted By binabrat
Words 1344
Pages 6
The Impact of Compensation Practices

February 20, 2011

“The ultimate goal of a pay system is to align the goals and interests of employees with the goals and interests of the organization” – Robert L. Heneman

The Impact of Compensation Practices

The business arena is ever changing. Where people work, how they work, the relationships in the workplace and compensation for their work continues to change. Hence, “It will be the challenge of compensation professionals to devise ways to reward and motivate employees who work under increasingly flexible arrangements” (Bennett, 1995). Most people interchange and have the perspective that pay and compensation are the same when in reality, compensation is more than just monetary rewards. Compensation is often misunderstood, and can also be misapplied. More often than not, it is out of synch with the values and processes of an organization. This is because despite continued organizational changes, the actual strategies for administering and implementing compensation is misaligned with the rapid changes in the company. “Pay can no longer be seen as a mere expense and cost of doing business, but instead must be viewed as an investment that is closely linked to the long-term success of the organization” (Flannery, et. al., 1996). As Cable and Judge (1994) note, “compensation systems are capable of attracting (or repelling) the right kinds of people because they communicate so much about an organization’s philosophy, values and practices”. Traditional vs New In the next decade, no job will be entirely secure. The “start up” companies will continue to be uncertain. Large companies may simply offer the stability and security but with a limited guarantee of long-term employment. The average American will most likely work in ten or more different types of jobs and at least five different companies before…...

Similar Documents


...Small Business Survival Rates, 2010, stated that were more than 627,000 new businesses in 2008. A small business is defined as a business that is privately owned and operated, with a small number of employees and relatively low volume of sales, and usually employs around 50 people, and is domestic companies with revenues of under $25 million. A 'small business' is a separate and distinct business entity, including cooperative enterprises and non-governmental organizations, which is managed by one or more owners and which predominantly carries on business in any sector or subsector of the economy. Small businesses have several characteristics, but the most successful small businesses deals in goods and services, have a desire to earn a profit, involve production or exchange of goods. Small businesses need a good environment in order for the business to succeed and grow. Successful small business owners have many and varied characteristics, small businesses employ more people than large businesses and export the vast majority of products. Many people are motivated by the flexibility provided to them if they own a small business; which makes them motivated by personal and family considerations. A small business must have a desire for independence and a strong sense of initiative. They must be able to react quickly to change inside and outside the business. Another characteristic involves being dedicated to the business, by investing time, energy, and emotion. Small......

Words: 326 - Pages: 2

Employee Engagement

...commission(1961), bonus is sharing by worker in the prosperty of the concern in which they are employed. In the case of low paid workers such sharing in the prosperty argument earnings and help to bridge the gap between the actual wages and need based wage.It has litile direct incentive effect because it is usually paid to all workers at the same rate irrespective of their individual efficiency and long after the close of the financial years. 4. Fringe benefit A brod range of benefit and services are provided by an employer to his employ in addition to wage and salary. These are based on critical job factors and performance. These represent indirect compentation. These are no longer fring as these constitute a significant part of total comensation package and substantial labour cost for employer. Criteria (i) It should be computable in terms of money. (ii)The amount of benefit is not generally predetermined. (iii) There is no control as to when are benefits available. Need and Importance- (a) incentives motivation (b) Improve employee’s standard of living. (c) Attract better talent. (d) Reduce labour turnover, (e) Reduce overtime costs (f) Discourage labour cost (g) Help labour in rising cost of living (h) Labour legislation had made some of them compulsory e.g..PF/Pension (i) Power of unions. (j) Part of social responsibility and human relations, (k) Sense of security and welfare – health safety, etc....

Words: 1336 - Pages: 6

Geico style. Also, it should help structure the components of the rewards system to influence and motivate employee behavior in the right direction (WorldatWork, 2007, p. 23) References Goldsmith, M., & Carter, L. (2010). Best Practices in Talent Management. San Francisco: Pfeiffer. Hellriegel, D., & Slocum, J. W. (2010). Organizational Behavior. Mason: Cengage Learning. Holley, W. H., Jennings, K. M., & Wolters, R. S. (2012). Employement and labor relations. Mason: South-Western, Cengage Learning. Iacobucci, D. (2010). Marketing Management. Mason: Cengage Learning. Silzer, R., & Dowell, B. E. (2010). Strategy-driven talent management. San Francisco: Jossey-Bass. WorldatWork. (2007). The worldatwork handbook of comensation, benefits and total rewards. Hoboken: Wiley & Sons....

Words: 1682 - Pages: 7