How do you reply to the following discussion post? Minimum of 150 words. Thank you in adavance!
Compensation is defined as a systematic approach to providing monetary value to employees in exchange for work performed.
Fair compensation then has to consider those additional qualities an employee possesses to provide a fair compensation like.
Qualities like knowledge, experience, proprietary skills, and any other personal trait or characteristic which clearly projects performance in accordance with a person's position description should be accounted for.
Dessler (2013, pg 352) reminds us that, "the compensation plan should first advance the firm's strategic aims--management should produce an aligned reward strategy."
I view "aligning" as a compensation plan that satisfies an employee's return in personal contributions towards a company's performance requirements.
Dessler (2013, pg 353) said it best, "the equity theory of motivation postulates that people are strongly motivated to maintain a balance between what they perceive as their contributions and their rewards." I wouldn't want my pay to be determined of anything other then the sweat equity I put into it. If I am not earning what I bring home, then I am not fulfilling my inner emotional and mental desire to provide for my family.
I also believe who should consider the type of business as well in determining a fair compensation structure for employees. Are we talking about a fortune 500 or 1000 company or a fast food shop on the corner.
The 1938 Fair Labor Standards Act regulates a, "minimum wage, overtime pay, record keeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments" (USDOL, n.d.), but a minimum wage is hard to make a living off of. Businesses that do pay above the minimum wage therefore can't remain satisfied with a status quo pay plan in today's highly competitive market of working human capital and competition.
Clayton (2015) states that when employers, "establish and administer a solid, market informed compensation structure and define their compensation philosophy to stay current with pay trends, they signal to their employees that they value them." Putting in place a market valued pay plan, which shows employees their compensation is comparable to their peer group(s) as well as publicizing the pay policy builds the vital trust employees would seek in an honest employer.
If a company is experiencing a higher than normal turnover of employees, it would be time for HR to get engaged. I would use the employee survey method as a data source, since I think employees will probably search the market value of their current position and tell you what skills they are using or possess that are not being compensated for within the job description.
One thing seems very apparent with sustaining a failing or ineffective compensation plan and that's the associated costs with losing employees. Clayton (2015) said, "It is estimated that turnover costs companies anywhere from 20% to 30% of the former employee's salary until new talent is identified and is officially up to speed in the new role." To retain the best you have to reward satisfactorily!
References:
- Clayton, C. (2015). Top 3 Compensation Best Practices & Costs Associated. Helios HR.
- Dessler, G. (2013). Human Resource Management (13th ed.). Upper Saddle River, NJ: Prentice Hall
- United States Department of Labor (USDOL) (n.d.). Compliance Assistance - Wages and the Fair Labor Standards Act (FLSA).