Compensation and employee relations essay

 

 

COMPENSATION AND EMPLOYEE RELATIONS IN HRM

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Compensation and Employee Relations in HRM

Employee compensation is payment to an employee due to their contributions to the success of an organization. It majorly regards to wages, vacations, time off and salary programs. It includes the guaranteed pay that is a fixed amount of cash given to the employee by the employer; its primary form is the base salary (Machado, 2016). Variable pay which is non-fixed cash incentive paid to an employee, it relies on performance and discretion. Benefits are also part of the compensation given to an employee, it is awarded in the form of insurance, company car, and paid time off. Furthermore, equity-based compensation is another form of compensation granted to an employee (Kucherov, et al...2012).

Advantages of employee compensation

Compensation of employee has a great impact on the company and the employees. First, it increases the work output of an employee. Since the benefit depends on the workout, employees will be motivated to work extra hard to earn the bonus. This will buffer the industry output (Machado, 2016).

Secondly, the company’s profit will increase. Due to the improved morale amongst the employees, they will work extra hours to earn the compensation. In regard to this, the profit of the company will be boosted by a certain percent.  Also, it increases the economic security of an employee. Some staff is depending on the company as a soul source of income and if they are given incentives on their contributions their financial security will be increased. By increasing the financial safety of the staff, the employee retention across the firm will also improve. The prime objective of an organization is to keep and maintain their employees in a good state of health and productivity.

Furthermore, employee compensation drives the staff workout and team spirit. The basic idea of compensation is to pay bonuses while producing more,  by offering compensation the team spirit of the workers will be increased thus their workout will also increase.

Disadvantages of employee compensation

Despite the advantages of compensating and employee, there are various problems involved. These includes increased cost. By paying an employee, the cost of production will be increased. This has an adverse impact on the company’s income level. A company may strive to have all their production increased by giving out a strict set of rules and guidelines; employees would still produce the same sort of work output thus the compensation will just be increasing the cost of production (Machado, 2016).

Secondly, the security of employee is reduced. Since some benefits depend on the salary scale of an employee, their security level will be reduced. Moreover, the organization will have to incur a cost of hiring an IT expert, and CCTV camera manager, to monitor the employee job attendance, work output, this will increase the cost of the company.

Lastly, compensation of employees creates dispute amongst the employees. Some employees if un-rewarded will feel that their work is not recognized, or other co-workers are favored, leading to significant conflict among them.

In conclusion, employee compensation has both merits and demerits. Before they are administered the organization should have elaborated on the possible impact, it would impact on the firm operations. If well-administered compensation will buffer the output of an organization and later its profitability but if wrongly done it may cause the collapse of the company.

 

References

Bachrach, D. G., Ogilvie, J., Rapp, A., & Calamusa IV, J. (2016). Reward Systems: Compensation at the Store Level. In More Than a Showroom (pp. 39-55). Palgrave Macmillan US.

Behtoui, A., & Neergaard, A. (2010). Social capital and wage disadvantages among immigrant workers. Work, Employment & Society, 24(4), 761-779.

Gerhart, B., & Bretz Jr, R. D. (1994). Employee compensation. New York.

Kucherov, D., & Zavyalova, E. (2012). HRD practices and talent management in the companies with the employer brand. European Journal of Training and Development, 36(1), 86-104.

Machado, C. F. (2016). Human Resource Management: An Operational Perspective. In MBA (pp. 77-103). Springer International Publishing.

Milkovich, G. T., Newman, J. M., & Milkovich, C. (2002). Compensation (Vol. 8). T. Mirror (Ed.). London: McGraw-Hill.

Rynes, S. L., Gerhart, B., & Minette, K. A. (2004). The importance of pay in employee motivation: Discrepancies between what people say and what they do. Human resource management, 43(4), 381-394.

 

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