Question

In 200 words or more, Should compensation adjustments be based on market movement, meritorious performance, or a combination of both?

Answer 1

Compensation adjustment is the permanent increase in the basic pay. In this policy it also covers non-contractual bonus. In this adjustment it does not includes contractual compensations agreement such as, steps increase, do not a cross the board adjustment. The different compensations process is- discretionary adjustment, equity, market adjustment, salary saving, temporary adjustment, reclassification. It is basically for intended use and to meet organisations goals. In every organisation there should be expert for developing compensation structure. It is very critical element in every organisation.

Yes, Compensation adjustment should be based upon market movement and meritorious performance. Merit is the necessary part for all basic increase. Salary adjustment and increase in that takes into equities, career or the structural factors which are based upon merit. In the human resource management, the organisation should think differently about merit pay. Performance is the primary objective, it’s also justify the determination of employee and employee’s compensation and their ability are justify by this. For any company performance is the key factor, if an employee is giving their 100% then its company responsibility to pay back them according to their merit so that they will be highly motivated and self-satisfaction will be there. Market movement is the percent by which the industry market has adjusted their salaries. This percent can apply to the reflect the competition or competitive market over time. Understating the market movement helps with salary decisions in the organisation. Market equity and market adjustment are the increase in the salary given to the individuals which matches the competitive changes. To maintain the value and market quality, market adjustments are being provide.