Compensation

Examples of Compensation in the following topics:

• Compensation and Competition

  • Good compensation helps organizations stay competitive in their industry by retaining high-quality employees.
  • Compensation is what employees receive for the work they perform at a company.
  • Compensation can come in the form of cash as well as benefits (e.g., health insurance).
  • Compensation can be a two-edged sword if it is not managed properly.
  • On the other hand, high levels of compensation create high overhead for the company.

• Employee Compensation and Benefits

  • Compensation and benefits is the subdiscipline of human resources that deals with employees' remuneration.
  • Compensation and benefits (C&B) is a subdiscipline of human resources that is focused on policy making for employee compensation and benefits.
  • Employee compensation and benefits can be divided into four general categories:
  • Equity-based compensation—A plan that uses the company's shares as compensation.
  • Equity-based compensation is a compensation plan that uses the employer's shares as employee compensation.

• Monetary Employee Compensation

  • Monetary compensation can be either guaranteed (base) pay or variable pay and positively correlates with job satisfaction.
  • Monetary compensation includes both guaranteed (base) and variable pay.
  • The results of these studies show that employees who feel that they are underpaid relative to their skill levels will not perform as well as they would if they felt that they were appropriately compensated.
  • The effect of compensation on employee job satisfaction has also been studied.
  • Identify the different cash compensation models (i.e., guaranteed and variable) and the behavioral implications of using monetary compensation

• Employee Benefits Management

  • Employee benefits are non-wage compensations designed to provide employees with extra economic security.
  • Employee benefits are non-wage compensations designed to provide employees with extra economic security.
  • Human resources (HR) has a wide range of responsibilities, including hiring, training, assessment, and compensation across the company.
  • Benefits and compensation, however, lay at the center of HR operations and play a central role in both the financial capacity and talent management of any institution.
  • Employee satisfaction and compensation help companies achieve high efficiency and strong performance from their employees by administering the appropriate level of compensation and benefits.

• Non-Monetary Employee Compensation

  • Non-monetary compensations (e.g., benefits) are essential in recruiting skilled employees and maintaining a satisfied workforce.
  • Employers have several options with respect to non-monetary compensation.
  • The largest category of non-monetary compensation includes benefits.

• Assessing and Restoring Equity

  • In practice, all else being equal, this means an employee would find it acceptable for a more senior colleague to receive higher compensation, since the value of the senior employee's experience (and input) is higher.
  • Managers are tasked with assessing equity: identifying both the quantity and quality of a given individual's inputs and comparing that to his or her overall compensation.
  • Managers are also responsible for discussing this situation with their subordinates, ensuring that they feel their contributions are being matched by their salary and other forms of compensation.
  • In any position, employees want to feel that their contributions and work performance are being fairly compensated.
  • Workers have a right to be compensated in a manner that reflects their value; if they are not, then management must restore this equity or risk losing valuable talent.

• Perspectives on Motivation

  • Cognition-oriented theories generally revolve around expectations and deriving equitable compensation for a given effort or outcome.
  • It values the culmination of employee experience, skills, and performance against their respective compensation and advancement opportunities.
  • Essentially, Expectation Theory and Equity Theory demonstrate the value of rewarding an employee's investment of time and effort with appropriate compensation.
  • Variable compensation, as found in many sales jobs, is a prime example of this concept.
  • Job-oriented theories adhere to the view that employees are motivated to complete tasks effectively because of an innate desire to be fulfilled or to contribute and that compensation and other forms of incentives are less important to them.

• Equity Theory

  • Compensation, whether hourly or salaried, is a central concern for employees and therefore the cause of equity or inequity in most, but not all, cases.
  • Subtle or intangible compensation also plays an important role in feelings about equity.
  • Depending upon the organizational structure and its distribution of authority, the decision to provide monetary compensation for a strong work deliverable is not always in the hands of an employee's direct manager.

• The Importance of Fringe Benefits

  • A combination of wages and benefits such as health insurance, vacation time, and retirement plans have become an expected form of compensation for today's employees.
  • While stock as compensation has unique taxation rules, which can make it more or less attractive for specific people, it also has the added benefit of motivating the employee (particularly top management) to work to achieve broader organizational success.

• Culture-Specific Nuances of Human Resources Management

  • Hiring the best employees in a new culture requires understanding how to communicate, compensate, and motivate within that cultural context.
  • An example of localization is identifying differences in motivation (see the Cross-Cultural Management concept on Culture-Specific Nuances of Motivation) and ensuring that compensation and cultural expressions align with the demands of that group.