In the organization, lower compensation is one of the biggest
reasons for disputes between employers and employees.
Usually, the employees give most of their time, skills,
knowledge, and energy to the organization, but in return, they
have not got the right amount of compensations. Basically, the
compensation is getting affected due to several internal and
external factors. Of these, the internal factors that are affecting
the compensation include the employer's affordability,
compensation policy of the organization, the organizational
ability to pay, worth of a job, employee-related factors,
employee's worth, and job analysis and job description. On the
other hand, there are some external factors that include the
cost of living, prevailing wage level, government control,
compensation survey, globalization, demand and supply of
labor, economic conditions, society, labor unions, legislation,
and cross-sector mobility (Factors affecting employee
compensation. Economics Discussion, 2019).
It is very important for an organization to look after the
compensation planning strategies as it can have a negative
impact on the employees, the business or organization, and the
local community. First of all, the compensation package can
come in different forms, such as flexible benefits, work-life
balance, employee perks, and medical care. When the
compensation is not satisfactory for them, it directly affects the
efficiency and performance of the employees. Likely, the
organization may face low productivity, low job satisfaction,
and high turnover. In addition, this can also lead to affect the
quality of work and the growth of the organization (Dirks,
2021).
Compensation management is considered as the organized
practice, which balances the work-employee relation by
offering the benefits of non-monetary and monetary to
employees. Moreover, the compensation includes different
kinds of payments such as profit sharing, bonuses, recognition
rewards, overtime pay, and sales commission. If a more people-
friendly compensation practice was incorporated in the
organization, then it would be helpful to increase the
productivity of the organization. Also, it will help to achieve the
goal of the organization and run the organization successfully.
In addition, incorporating the people-friendly compensation
practice will bring satisfaction and self-actualization among the
employees to achieve the organization's goal (Compensation
management and benefits (Human Resource Management).
Compensation Management and Benefits, Compensation
Management Notes, Compensation Management Definition,
2021).
References
Compensation management and benefits (Human Resource
Management). Compensation Management and Benefits,
Compensation Management Notes, Compensation Management
Definition. (2021). Retrieved January 12, 2022, from
https://www.civilserviceindia.com/subject/Management/notes/com
pensation-management-and-benefits.html
Dirks , E. (2021, March 31). How compensation affects employee
performance. HRSoft. Retrieved January 12, 2022, from
https://hrsoft.com/how-compensation-affects-employee/
Factors affecting employee compensation. Economics Discussion.
(2019, July 25). Retrieved January 12, 2022, from
https://www.economicsdiscussion.net/human-resource-
management/factors-affecting-employee-compensation/31636
