Compensation

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Required Resources

Text

Read the following chapters in Strategic human resource management: Concepts, controversies, and evidence-based applications :

· Chapter 9: Compensation and Incentives

· Chapter 10: Benefits and Benefits Administration

Article

Lipman, V. (2013, September). Surprising, disturbing facts from the mother of all employee engagement surveys (Links to an external site.)Links to an external site. . Forbes. Retrieved from http://www.forbes.com/sites/victorlipman/2013/09/23/surprising-disturbing-facts-from-the-mother-of-all-employee-engagement-surveys/

Multimedia

Swank, A. (2004, July 31). Table of Information (Links to an external site.)Links to an external site. [Video file]. Retrieved from http://youtu.be/AAYW2ggLIXk

Recommended Resources

Article

Connors, G. (2013, February). Employers: Your HR managers should be ‘expert’ at being a fact witness (Links to an external site.)Links to an external site. . Forbes. Retrieved from http://www.forbes.com/sites/theemploymentbeat/2013/02/27/employers-your-hr-manager-should-be-expert-at-being-a-fact-witness/

Davidson, L. (2013, August). 11 misunderstood employee benefits and how to make the most of them (Links to an external site.)Links to an external site. . Forbes. Retrieved from http://www.forbes.com/sites/financialfinesse/2013/08/15/what-you-dont-understand-about-your-benefits-could-hurt-you/

Parrish, S. (2013, June). Who says your compensation is ‘reasonable?’ (Links to an external site.)Links to an external site. . Forbes. Retrieved from http://www.forbes.com/sites/steveparrish/2013/06/11/who-says-your-compensation-is-reasonable/

Websites

Gallup. (2014). Report: State of the American workplace (Links to an external site.)Links to an external site. . Retrieved from http://www.gallup.com/services/176708/state-american-workplace.aspx

Frederick Herzberg motivational theory (Links to an external site.)Links to an external site. (n.d.). Retrieved from http://www.businessballs.com/herzberg.htm

LECTURE

Compensation, Incentives & Benefits

In order to prepare for this week’s assignments, students are required to read Chapters 9 and 10 of the Youssef and Stark (2014) text. Chapter 9 begins with the claim that, “Pay and benefits are critical factors in the attraction, motivation, and retention of talent, and it is probably unwise to consider them as separate entities” (Youssef & Stark, 2014, p. _). Compensation, incentives, and benefits are all part of a package that is intended to encourage the right people to want to use their talents to do their best work for an organization (recruitment and selection) and to reward people for doing their good work so they will stay with an organization (retention and development). In short, compensation, incentives, and benefits should comprise a package of ways to motivate people to do their best for an organization and the motivation should be consistent with the mission and vision of the firm. At best, there should be alignment between the organization’s mission and values and the employee’s motivation, compensation, incentives, and benefits.

Employee Motivation & Job Satisfaction

Among the content perspectives on motivation included in Chapter 9 of the Youssef & Startk (2014) text is Herzberg’s two-factor theory. Back in 1959, Herzberg and colleagues asserted that there are two categories of employee motivators: 1) the hygiene factors that are extrinsic (outside an individual, such as compensation, working conditions, benefits, relationships with co-workers, etc.) and often determine whether a person takes a position and often whether or not they stay, and 2) the motivators that are intrinsic (internal and individualistic, such as a sense of achievement, opportunities for personal development, and the performance of meaningful work) that contribute to job satisfaction and, sometimes, organizational commitment.

Anyone who does not perceive these two factors as critical to the performance of an individual or organization might want to visit the Gallup (2014) State of the American Workplace website (see references below) and consider that in an ongoing study of the American workforce, across various segments and industries, the empirical data found about 30% of the workforce is actively engaged in their work – or what Herzberg might describe as motivated. About 20% of the workforce is actively disengaged (e.g., likely working harder at not working than at working). What this means for an organization can be bad enough, but what it means for US society is that about 70% of the workforce (which consists of about 100 million Americans) are not motivated to do their best work. This is an important consideration for Human Resources Managers (HRM) and others. It means that compensation, incentives, and benefits need to be carefully considered. Clearly, although financial remuneration is important, it is not the only compensation, incentive, or benefit that is important for employees and employers alike. For additional information, refer to Lippman (2013), one of this week’s assigned readings for the course.

Pay Equity and Employee Engagement

Now, admittedly, results of the best research ever conducted and exhibiting the result of unequal compensation structures may or may not be found at the following website:

http://www.upworthy.com/2-monkeys-were-paid-unequally-see-what-happens-next?g=3&c=upw1 (Links to an external site.)Links to an external site.

In any case, it is clear: even a monkey immediately catches on to not being treated fairly and equitably in the workplace. Even a monkey who is treated unfairly in the workplace is likely to disengage and have lower levels of job satisfaction quickly. However, compensation, incentives and benefits are also clearly more complex topics than what has been demonstrated in the video! They involve the most important asset in any organization – the organization’s talented human beings.

During this week, there will be many opportunities to reflect upon and explore how to motivate employees to want to contribute their best work in an organization and how to align employees’ best work with compensation, incentives, and benefits. There is often much more at stake than any one person’s job satisfaction or what meets the untrained eye.

Employee Incentives, Benefits & 21st Century Organizations

Just as compensation and pay equity are evolving HRM issues, so are employee benefits. Davidson (2013) provides additional insights on some benefits that people may know they have in their employment, but frequently misunderstand until the employee attempts to use those benefits and finds that what he or she thought they were entitled to was a misinterpretation of what is really in their benefits package. Consistently, Parrish (2013) asserts, “Besides paying wages, there are other ways to compensate yourself and your key employees.” The opportunities to examine ways to be creative, motivate employees, and provide exemplary benefits are explored this week beginning in the course discussions. Forbes School of Business Faculty

References:

Critchfield, S. (2011) 2 monkeys were paid unequally: See what happens next (Links to an external site.)Links to an external site. . Upworthy. Retrieved from http://www.upworthy.com/2-monkeys-were-paid-unequally-see-what-happens-next?g=3&c=upw1

Gallup. (2014). State of the American workplace: Employee engagement for U.S. business leaders (Links to an external site.)Links to an external site. . Retrieved from http://www.gallup.com/strategicconsulting/163007/state-american-workplace.aspx

Parrish, S. (2013, June). Who says your compensation is ‘reasonable?’ (Links to an external site.)Links to an external site. Forbes. Retrieved from http://www.forbes.com/sites/steveparrish/2013/06/11/who-says-your-compensation-is-reasonable/

Sacbusiness.org. (2007). Herzberg’s motivation-hygiene theory (Links to an external site.)Links to an external site. . Retrieved from http://www.sacbusiness.org/marketing/john%20materials/Bus%20120/herzberg.pdf