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Compensating employees is a very important process in an organization as it motivates them as well as ensures that they get to meet their basic needs. A compensation and benefits program is necessary for any business as it reflects what employees of the company will be paid for their work that they do. It also contains the benefits that come as a result of working in the enterprise. It also reflects on the management what they ought to expect in the labor costs at the end of the month. A good compensation and benefits plan motivates employees to work hard in their jobs and therefore, it is necessary that a company sets an amount that is enough to do that. This paper aims at drafting the compensation and employees compensation plan for the employees in my organization. Compensation is any payments to employees when there do their jobs. All job positions shall have a minimum as well as a maximum pay

The piece rate payment method reimburses employees by each unit produced by an individual. Workers benefit where they produce large quantities of goods since they receive high payments. This method does not consider how fast or slow a person works and. Therefore, it is fair to people who have little experience and knowledge. This method has the advantage of motivating employees when they make more money, and, therefore, they produce more. Hourly compensation is whereby employees are paid according to the hours that they have worked rather than what they could have produced. Most companies use this method to pay their workers since labor laws also state that wages should be paid per hour. Less productive workers benefit in this practice since they are paid equally (WorldatWorkOrganization, 2007).

External equity is the employees’ perception on matters concerning payment when they compare their company and other employees of companies doing a similar job. It is one of the traditional job-pay systems that most employees have been using for ages. External equity is most of the time concerned with the relativity of pay among similar organizations but not within their current workstation. Unlike the external equity, internal equity may be lowered so as not to attract newcomers to the job. In fact, many human resource managers admit that job pay is one of the most effective criterions is their move to control the jobs applicants. This paper will expound on the issues surrounding the external equity. Further, it will explore the compensation concept and the external factors that influence pay in organizations (Price, 2011).

Companies prefer paying workers according to the prevailing market rates so as to get experienced and competent employees in their organization. On the contrary, low pays affect the employees negatively, and they end up losing their morale to work at your organization. The market pay is determined by the interaction of demand and supply in the job market. This condition means that the number of people who are up for the job is the supply side while demand side consists of the individuals who are willing to get the position. Organizations can improve their external equity by reviewing human resource factors that are both internal and external. As a result of serious engagement in to the task, the external equity is expected to improve which is all just a matter of relativity and comparison. Sometimes companies find it hard to determine the external equity (Aswathappa, 2005).

This situation is significantly contributed by the fact that different individuals give different opinions and expecting them to come it agreement or having a similar opinion will be hard. Inequality may be experienced when the organization offers compensation based on the market rates. Workers tend to compare the work that is being assigned to them and the pay they receive and conclude that it is not worth. In coming up with the most appropriate external equity poses a big challenge to all human resource managers in organizations (Price, 2011)

Similarly, compensation for the employees is regarded as the total amount of remuneration which they receive after working. It is also a systematic way in which employees are provided with monetary in exchange for the work that they have performed. Human resource at times refers compensation as both money and other benefits accrued through performing of tasks well. Economic compensation of the work done is referred to as wages although people use it interchangeably with salary. Salary is referred to as the compensation in monetary terms that is given to people having white-collar jobs. Incentives are additional payments that are given to employees and in most cases are linked to the high productivity of the company. Fringe benefits may be termed as part of compensation in which employees are accorded as a result of long-term relation with the company. A good example of this form of compensation is the pension funds. Lastly, the perquisites are forms of compensation that one given so as to take care of the organization’s property. A perfect example of this form of compensation is the company car. Compensation also varies with the levels of competence and the experience that an employee has. High compensation is given to employees with experience and high qualification. New recruits with no experience receive a lower compensation compared to others.

Organizations structure a competitive compensation programs in their move to increase profitability and to remain relevant in the industry. Also, competitive compensation serves as means to keep the employees motivated so that they may perform their work diligently. Organizations need to come up with advanced competitive compensations plans so as to reward the newly hired individuals in the organization. This move enables the organization to retain young talents in the company failure to which they will quit the job and reduce productivity. Competitive compensation programs enable the human resource to deepen their knowledge pertaining the organization. Acquiring specific knowledge about the organization makes work of preparing compensation budget easier and lead to the excelling of company’s activities. Further, organizations need to decide how competitive they want to be about the current market (Aswathappa, 2005).

References Aswathappa, K. (2005). Human resource and personnel management: Text and cases. New Delhi: Tata McGraw-Hill. Price, A. (2011). Human resource management . Andover: Cengage Learning EMEA. WorldatWork (Organization). (2007). The WorldatWork handbook of compensation, benefits & total rewards: A comprehensive guide for HR professionals. Hoboken, N.J: John Wiley & Sons.