Question

Compensation is the total of an employee’s pay and benefits. It is a major reason for job satisfaction and affects attracting and retaining employees. Compensation costs are frequently the largest part of total production costs at today’s firms. Because this is the case, companies must have a strategic plan for managing employee compensations

Using compensation, incentive, and benefits, answer the following questions to decide on the specific aspects of your employee compensation system:

1. When, how, and why do these employees receive salary/pay increases?
2. What type of compensation do you offer to the 10 employees? Of the four basic components to compensation—base pay, wage add-ons, incentives, and benefits, how is the fund available to pay these 10 employees divided between each of the components? Why?

Answer 1

The employee compensation system that I will frame for employees will include monetary and non monetary benefits which will be provided to employees at the end of each month for keeping them committed to work. The plan will be reviewed and revised every financial year to ensure that it us updated and relevant to the changing environment.

With respect to monetary compensation, employees will be specifically paid salary/ wages (Basic Pay) for the amount of hours worked in the particular field of the organization. While the incentives and bonuses will be purely based on the performance outputs,, targets accomplished and other job related factors. Apart from it other monetary benefits such as paid leave, free tours, etc will be paid leave on the factors such as behavior, commitment, discipline, attendance, participation etc.

The non monetary compensation will include various qualitative benefits such as holidays, vacations, half days and other fringe benefits etc purely based on concerned factors for qualifying for them. Moreover recognition such as awards, acknowledgements, transfers, promotions , status etc will also be covered here based on the experience, qualification, change adaptation, flexibility,,knowledge and other factors.

This criteria is followed to on one hand instill fairness and equity in compensation system i.e each employee should be paid as per the nature of work plus the amount of hard work or efforts put to achieve specific or desired performance outputs. On the other hand this criteria also ensures that the high performing candidates stay motivated to surpass their targets every time through recognising their work individually apart from the peers. Moreover this will also ensure that low performing employees automatically get motivated to also perform well to avail such benefits as received by high performers. High performers or experienced employees will not think that their contribution is going waste by being treated equally with freshers or average performers...so this demarcation on the basis of hard work and efforts is important to consider.

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Thanks dear student.. Hope this helps..

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