Connect with us


Understanding Employee Compensation

It is a well established fact that employees look at what they take home seriously.

At the end of the day, their remuneration is what they take home to their families.

Economic times have changed, sometimes for worse, but currently things are looking up.

Employee Compensation

Firms had to cut down on the amount they spend on wages and

salaries due to the global economic slam that was with us a few years ago.

This meant that there was very little chance for employers to increase salaries.

Things are far much better now, and companies definitely have to evaluate their compensation strategies.

Performance Linked Compensation

It makes a lot of sense for a company to pay that particular employee whose performance has contributed significantly towards the revenue and
the growth of the business more than other employees.
That is what per performance pay refers to.
A basic pay may exist as a common platform for all employees,
but those employees who go the extra mile to ensure the company attains its goals and objectives are paid more.
The only tricky bit lies in measuring performance. Objective measures should be applied to avoid bias.
This approach is indeed what most companies are currently resulting to, though many firms had put it on hold during the fore-mentioned adverse times.
It has the benefit of ensuring that only those whose performance is beyond average get the perks, though critics argue that it is discriminatory.
It is a good model to use, as long as objectivity is maintained.
It is worth noting that performance appraisals can be very useful in determining the performance of an individual.
HR software with performance review capabilities should be employed where necessary to ensure that the pay of an employee is commensurate with his or her contribution to the business.
Even though there are quite a few different packages in the market, BreatheHR is one of the best in terms of value for SMEs. For bigger organisations Peopleres offer some great packages.

Across the Board Increments

This is an older approach whereby employees’ salaries are increased across the board. It does not in any way take into account the individual’s performance.
Employees’ salary is increased en masse without considering performance. The raise is usually percentage based, in the range of 1 to 10%.
All employees benefit from this approach. Most companies are however moving away from this approach in a bid to strategies that increase productivity.
Many argue that employees are not motivated to go an extra mile, because they know the increase will be automatic.
Others further argue that it demoralizes the best employees in the firm because they work so hard to achieve organizational goals,
yet no one appreciates their contribution. If anything, they think that other employees ride over their glory.

Effect of Culture

Organizational culture has an impact on the approach adopted by the management.
Some businesses would like to depart from across the board increments but the culture in existence has made it difficult to break away from the traditional way of doing things.
However, the management styles should strive to ensure that merit based approaches are used in determining how much an employee takes home.
Organizations should be flexible enough to adopt an approach that suits the existing economic times.
This post was written by James Ross who has spent the last 5 years in HR Management.
James has teamed up with HR Management company to bring you the best knowledge in HR.
James likes writing, cycling and travelling in his free time.
He is hoping to raise money for a local charity which helps disabled children.

Continue Reading

Recent Posts

Business2 months ago

Business Tips For Protecting Your Finances During A Recession

In 2023, taking the necessary steps to protect your finances for your business is now more important than ever. The...

Lifestyle3 months ago

Tips For Cleaning Your Trainers

If you’re into your trainers and streetwear, you’re likely to be very conscious of keeping them looking their best! So,...

Marketing3 months ago

Branding Trends For Start-Ups in 2023

Branding is incredibly important as it impacts how your business reaches and connects with its target market. If you’re branding...

Business3 months ago

Avoiding the Wrong Kind of Growth

Growth is vital for any business – some models, like tech start-ups, are built around periods of dramatic, explosive growth...

Business4 months ago

How To Become A Property Developer

There are several reasons why an individual will want to become a property developer. One of the main reasons for...

Tech6 months ago

What Is The Difference Between Cyber Attacks and Cyber Threats?

If you own a business that uses the cloud to manage workloads, you have probably heard of the terms cyberattack...

Marketing6 months ago

3 Types of Marketing Every Small Construction Business Should Do

Construction is a very saturated sector, whether you’re a large or small construction company, so marketing should be at the...

Business7 months ago

How Relevant Life Insurance Plans Can Future-Proof Your Business

Last year, UK inflation reached the highest level that it had been for decades. The markets became unsteady and nervous...

Autos7 months ago

In a Car Accident? Here’s How to Find a Great Lawyer

If you’ve recently been in a car accident, you know that it can be an overwhelming experience. Not only do...

Education7 months ago

Considering Therapy? Here’s a Few Common Therapy Techniques Explained

If you’re considering therapy as a means to improve your mental health, you may be curious about the type of...

home repairs home repairs
Home Improvement7 months ago

Top 5 Home Repairs You Should Never DIY

DIY home repairs are all the rage these days. But before you jump on the bandwagon, there are some things...

Health8 months ago

The Power of CBD Oil for Relaxation: How to Use it for Sleep and Stress Relief

If you’re struggling to get a good night’s sleep or feeling stressed, try CBD oil. CBD oil has a moment...

General8 months ago

Benefits of Getting your Mobile Phone Repair

Mobile phone repair is a task that needs high skills and experience. That is why we always recommend users trust...

Home Improvement8 months ago

Great Ways To Clean To Get Your Security Deposit Back In Full

Moving is almost always stressful as there are tons of things to plan and do. Getting your security deposit back...

Home Improvement8 months ago

DIY Garage Door Repair: Tips and Tricks for Fixing Common Problems and Maintaining Your System

If your garage door needs to be fixed, wait to call a repairer. Many common problems can be fixed quickly...