Compensation In The Workplace

It is true; compensation is a major factor when it comes to new and current employees selecting or staying in their current jobs. However, there is a deeper underlying factor involved with compensation and how it can affect companies. Analyzing compensation has brought up 3 major underlying factors in compensation amongst a workplace such as, attracting new employees to make recruiting and hiring possible, retaining good employees and the use of compensation to motivate employees to perform well on their jobs. First, compensation plays a key role in attracting new employees with making hiring easier and or even possible. When looking to recruit new employees it is very important to make the compensation package appealing to those new employees.

It’s essential to create a company environment where compensation rewards employees for company loyalty. Strategic plans that reward and correctly compensates employees who have dedicated themselves to the company for many years will result in a positive work environment with low turnover rates. In addition, it further helps recruitment when the company can retain employees for a long time because it shows new employees that the company values workers who choose to remain with the company long term. Therefore, showing happiness with the company and further dedication to the organization. By correctly compensating employees and offering further pay incentives such as bonuses or paid time off, the company will suffer less from employee turnover, which will benefit their success in the long run. CNBC guest columnist Ron Volper summarizes how paying employees’ salary and incentives will positively impact an organization, “The companies with the highest employee morale and productivity pay a mix of salary and incentives. The salary compensates employees for performing all the tasks required of them and provides them with a consistent income.” This high moral and positive attitude for compensation will positively result in retaining good employees for the long run of their

One way to do so is to create a compensation plan where employees feel as if they’re apart of the organization. Some examples of this are a profit sharing approach or bonuses. This is a great way to make employees feel as if they are truly apart of the organization and when the organization does well, so do the employees. An article by Rose Johnson sums up the importance of compensation and motivation when she writes, “Many employees feel motivated to help their companies succeed if the employer shares its profits with employees, such as with bonuses or profit-sharing plans. The greatest impact of money on productivity and performance is in jobs where performance is directly related to compensation. For example, the knowledge of receiving a bonus after achieving a certain sales quota will likely motivate a salesperson to increase productivity.” I think this is a great example and a great reason why compensation is so important to motivate employees. When a employee feels as if he is working for not only the greater good of the organization but will also be recognized for his ongoing hard work, he will be motivated more to succeed. It brings a greater level of passion towards in organization, which directly leads to greater success from both the employee and