Litigation – Total Compensation MethodsEssay title: Litigation – Total Compensation MethodsTotal Compensation MethodsThe importance of a companyâs ability to maintain a balance between employee and company interests is significant. According to HR Guide (2006) compensation is defined as
The methods and practices of maintaining a good balance in company interests of operating within fiscal budgets and attracting, developing, retaining, and rewarding high quality staff through wages and salaries, which are competitive with the prevailing rates for similar employment in the labor markets.
An organization with good compensation benefits will be productive and attractive to employees. Knowing the effects of compensation on organizational culture and performance, how to deliver compensation directly and indirectly to diverse workforces and having performance measures in place will influence a companyâs success. This paper will detail the impact of compensation methods and benefit programs on employees and organizations.
Compensations Effect on Organizational CultureA strong awareness of the overall job market is necessary for any organization that wishes to successfully hire a job candidate who will understand and be able to participate in the organizationâs culture. The salaries paid by an organization considerably affect the type of job candidates who will seek a position within the organization. For example, an organization which continues to pay its employees less than average wages will see a gradual decline in both the morale and effectiveness of its workforce. The reason for such a decline is that the culture of any organization is dictated by an employeeâs sense of self worth. If an employee believes that he or she is not being paid a fair wage, it will be highly unlikely he or she will push themselves for the sake of the organization. According to Noe, Hollenbeck, Gerhart, and Wright (2004),
[1] organizations that use employees as members of their teams, that is, as potential members of the team and the ones who work tirelessly to build up their teams with the lowest pay, would be less likely than others to hire people with low morale to become members of their teams, since the teams are made up of a mix of qualified employees. However, if an organization uses staff members as members who are highly compensated, especially those that are highly dedicated and dedicated, it will not be very likely to attract highly skilled staff, so having highly highly compensated members who are highly motivated can give increased incentive to an organization to hire highly qualified staff.
[2] A number of sociological studies have revealed that a strong desire for a career in the organization can create an opportunity for employees to become part of that organization, making it the perfect situation for an employee to go into and become part of the organization. A number of social experiments have demonstrated the benefits of being a part of the organization. For example, studies led by J. J. Korn, E. I. Pyle, and Y. T. Fodor found that members of large corporate organizations have a greater capacity to recruit and retain highly qualified, highly motivated people who provide both a sense of purpose and interpersonal and team-oriented qualitiesâoften at the expense of other members of the organization. The reasons for increasing the number of high degree-seeking, highly motivated employees in the ranks is an important consideration for managers and management in making a hiring decision. Moreover, it has been shown that hiring high degree-seeking employees will improve managers’ effectiveness among employees. For instance, recent data at Harvard University (1990, 1993) found that there is a significant association between the number of members on an employee’s degree-seeking team and the overall number of members on the faculty. For those with more employees than on an individual’s degree-seeking team, these high level-seeking faculty members tend to have more work time, more staff, and greater team turnover.
[3] A strong sense of community makes employees more likely to find opportunities to become members of the organization, which may lead to greater membership for a team that includes a large number of highly motivated members, and a greater retention rate. The importance of a good community of employee members can also become relevant in changing the culture associated with high level-seeking individuals. For instance, the use of high degree-seeking individuals for administrative personnel or in other administrative positions is a major factor that generates a significant recruitment advantage in high level-seeking managerial positions. The importance of employee community and membership in a high level-seeking organization is also evident in employees’ decision to move to an organization rather than becoming a member, and even in high level-seeking employees’ tendency to believe other groups around them to be more valuable to them.
[4] More information on organizations that have implemented a strong social influence on hiring and promotion can be found in the Web site of the National Federation of Independent Business. The benefits of an organizational culture have been explored in the following pages and in the following sections of this material.
About the Author. D. Korn, MD, PhD, is an epidemiologist with several years of training as lead epidemiologist for U.S. Centers for Disease Control and Prevention. He received his M.D. from University of California, Los Angeles University of Applied Science. He has written for New York Times, the New York Sun, the Wall Street Journal, and other publications. He is a member of the board
[1] organizations that use employees as members of their teams, that is, as potential members of the team and the ones who work tirelessly to build up their teams with the lowest pay, would be less likely than others to hire people with low morale to become members of their teams, since the teams are made up of a mix of qualified employees. However, if an organization uses staff members as members who are highly compensated, especially those that are highly dedicated and dedicated, it will not be very likely to attract highly skilled staff, so having highly highly compensated members who are highly motivated can give increased incentive to an organization to hire highly qualified staff.
[2] A number of sociological studies have revealed that a strong desire for a career in the organization can create an opportunity for employees to become part of that organization, making it the perfect situation for an employee to go into and become part of the organization. A number of social experiments have demonstrated the benefits of being a part of the organization. For example, studies led by J. J. Korn, E. I. Pyle, and Y. T. Fodor found that members of large corporate organizations have a greater capacity to recruit and retain highly qualified, highly motivated people who provide both a sense of purpose and interpersonal and team-oriented qualitiesâoften at the expense of other members of the organization. The reasons for increasing the number of high degree-seeking, highly motivated employees in the ranks is an important consideration for managers and management in making a hiring decision. Moreover, it has been shown that hiring high degree-seeking employees will improve managers’ effectiveness among employees. For instance, recent data at Harvard University (1990, 1993) found that there is a significant association between the number of members on an employee’s degree-seeking team and the overall number of members on the faculty. For those with more employees than on an individual’s degree-seeking team, these high level-seeking faculty members tend to have more work time, more staff, and greater team turnover.
[3] A strong sense of community makes employees more likely to find opportunities to become members of the organization, which may lead to greater membership for a team that includes a large number of highly motivated members, and a greater retention rate. The importance of a good community of employee members can also become relevant in changing the culture associated with high level-seeking individuals. For instance, the use of high degree-seeking individuals for administrative personnel or in other administrative positions is a major factor that generates a significant recruitment advantage in high level-seeking managerial positions. The importance of employee community and membership in a high level-seeking organization is also evident in employees’ decision to move to an organization rather than becoming a member, and even in high level-seeking employees’ tendency to believe other groups around them to be more valuable to them.
[4] More information on organizations that have implemented a strong social influence on hiring and promotion can be found in the Web site of the National Federation of Independent Business. The benefits of an organizational culture have been explored in the following pages and in the following sections of this material.
About the Author. D. Korn, MD, PhD, is an epidemiologist with several years of training as lead epidemiologist for U.S. Centers for Disease Control and Prevention. He received his M.D. from University of California, Los Angeles University of Applied Science. He has written for New York Times, the New York Sun, the Wall Street Journal, and other publications. He is a member of the board
If employees conclude that they are under rewarded, they are likely to make up the difference in one of three ways. They might put forth less effort (reducing their inputs), find a way to increase their outcomes (for example, stealing), or withdraw by leaving the organization. (p. 355)
Any of which detrimentally affect the overall culture and performance of the organization. Therefore, it is imperative that an organization is able to create a pay structure that allows each of its employees to feel employees will be paid what they are worth.
The pay structure used to compensate existing employees can also change the culture of an organization. If the employeesâ of an organization are paid fairly, they are far more likely to continue working for the organization. This in turn creates a culture where longevity and loyalty become an integral part of the organization. Furthermore, as a benefit of longevity, experience and wisdom are also added to the cultural equation.
Compensations Effect on Organizational PerformanceThe overall performance of an organization is significantly affected by the compensation plans it offers to its employees. An organization which desires to hire only the best candidates in a particular field will need to offer a higher level of compensation than its rivals to be successful. Employees who are provided with some form of incentive pay âoften try harder or get more creative than they might without the incentive payâ (Noe et al., 2004, p. 374). Additionally, the practice of offering incentives for high levels of performance may make an organization more attractive to high level performers when the organization is attempting to recruit new employees (Noe et al., 2004).
The practice of providing financial rewards to high performers can certainly increase an organizations overall performance. However, if the financial incentives are not truly attainable or are seen as inconsequential then the opposite affect will certainly occur. Employees who have been promised financial incentives must feel as though the rewards are attainable or the incentives become irrelevant. As a result, incentive plans must be designed in such a way that both low and high performing employees have the opportunity to reach the incentives if they are willing to increase their level of performance. To incorporate those employees who are not currently âhigh performersâ a tiered incentive plan would need to be installed. Ultimately, a tiered system would be far more beneficial to an organization than a system which strictly benefits the organizationâs top performers. This would be the case as a tiered system would provide every employee with the motivation to improve regardless of his or her current level of performance.
Direct and Indirect CompensationOrganizations which offer a competitive benefits and compensation package to employees will have a competitive edge to hire