How Employees Can Be Motivated To Higher Levels Of...

According to history, the notion of compensation for work pre-dates to sometime between 10,000 BC and 1,000 BC during the Neolithic Revolution (Wikipedia). Back then, salt was used as payment till around 560 BC when coins came into circulation and money was invented (Wikipeida). Money became widely used as the payment for labour. To date, money is still the main medium of exchange between employer and employee. In today’s highly competitive market, organisations are often faced with increased competition from both domestic and foreign markets. To be able to stay competitive, attract and retain quality employees, it is imperative that the organisation have a compensation package that is valuable to its employees (Naresh 1998). Although†¦show more content†¦For most employees, base pay constitutes the largest component of their total compensation rewards package. It is given to employees based on time worked and not on any measure of output produced or performance contributions. Benefits are generally the second largest component of the employee compensation rewards package. While certain benefits are statutorily required, the remaining are usually negotiated by the employee unions or provided voluntarily by the organization. Benefits are generally given to employees based on how long they have worked for their present employer. Thus, benefits along with base pay help the organisation to attract and retain employees. The last component of compensation rewards is performance pay which is awarded based on some measure of output produced or performance contributions. For most salaried employees, this is given in the form of merit pay increase which is folded into base pay. Merit pay increases are tied to performance ratings of individual employees but generally bear a weak relationship to the organizations economic performance. With reference to Figure 1 (Lawler 1987), the framework shows that elements in the compensation system, i.e. performance measurement and evaluation, monetary compensation and career concerns links employee performance to their rewards in the form of monetary compensation and promotions. Hence, the framework suggests that rewardsShow MoreRelatedStrategic Compensation: Excellence and Plain Mediocrity1694 Words   |  7 PagesThere is a clear business case for strategic compensation. Well managed rethinking of performance management, rewards and benefits leads to better business results, stronger capability, higher staff retention levels, heightened motivation and employee satisfaction. 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