Chapter 7 - Recognizing and Rewarding Employees

Compensation to organizational objectives compensation

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Unformatted text preview: fashion serves to mesh the monetary payments made to employees with specific HR and business objectives Employers have adopted special pay strategies to attract job applicants with highly marketable skills Use compensation to retain scarce skills If rates of pay are high, organization may raise selection standards and hire better qualified employees o Reduce employer training costs o Performing at exceptional levels may increase pay rate Organization should have systematic way to manage employee compensation and that it is linked to business performance “total rewards” is a broader set of elements and includes tangible rewards and factors such as career development, work climate/culture, and work- life balance o Other items include extra day off, organizing fun event Linking Compensation to Organizational Objectives • • • • • • • Compensation has been revolutionized by heightened domestic competition, globalization, increased employee skill requirements, and new technology Managers need to change pay philosophies from paying for a specific position to rewarding employees on basis of individual competencies or group contributions to organizational success Improving employee’s focus on achieving business goals is a significant objective influencing reward changes Compensation program must be tailored to needs of the organization and its employees o Employees should feel they are being rewarded Organizations establish specific goals for aligning their organizational objectives with their compensation program Formalized compensation goals serve as guidelines for managers to ensure wage and benefit policies achieve their intended purpose Some common goals are: reward employees’ past performance, remain competitive in labour market, maintain salary equity among employees, control compensation budget, retain key staff, influence employee behaviours and attitudes The Pay- for- Performance Standard • Pay- for- performance standard – standard by which managers tie compensation to employee effort and performance o Serves to raise productivity and lower labour costs o See link between performance and rewards • Direct compensation options including merit- based pay, bonuses, salary commissions, job and pay banding, team or group incentives, and gain- sharing programs o Seek to differentiate between pay of average performers and outstanding performers • Consider how employee performance will be measured, what monies will be allocated for compensation increases, which employees will be covered, what payout method will be used, and when payments will be made • Critical issue concerns the size of monetary increase and its perceived value to employees The Motivating Value of Compensation...
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