Employees compensation is not limited to salaries or wages only, but includes all financial and non-financial offerings that companies provide to employees in favor of the employees’ work, knowledge, expertise, and skills, as per Figure 1 below. Employees compensation is one of the most sensitive and most important issues for both companies and employees. For companies, proper knowledge and practice of employees compensation ensure loyal and satisfied employees, which enhance the companies’ competitive advantage. Besides, good compensation practices save the companies from any legal or ethical or social problems with respect to employees’ and societal rights. From employees’ perspective, proper compensation practices ensure healthy working environment and better productivity. Besides, it ensures that employees know their fair compensatory rights, especially when negotiating salaries and compensation during initial employment and subsequent contract renewals. This session highlights employees compensation , which is the topic of Part 4 (Compensation – Chapters 11, 12, and 13) in Human Resource Management (2020) Book, Gary Dessler, Pearson, U.S.A. The book is the 2nd one in the 2nd Year Program within the service of Global English Management & Leadership Books in your Channel Management with Merits (MANWIM), Manage to Prosper. Next English Session, we will finish this book by discussing the 5th and last part (Enrichment Topics in Human Resource Management) in the book. To download the associated presentation (PDF) and to access our related sessions, kindly go to video at our YouTube Channel and click on the appropriate links in the description section below the video.
Employees Compensation Decisions
Employees compensation decisions take plenty of consideration factors; however, strategic fitness and compensatory equity/fairness are the most important ones from a personal perspective. First, Compensation packages must be aligned with the organizational HR strategy within the overall general strategy, as per the 1st below figure: What are the compensation packages required to provide and sustain the required competencies and behaviors to achieve the strategic goals? For example, the United Nations provides competitive compensation packages locally and internationally (Figure 2 Below) to attract and maintain employees who proudly and strictly reflect UN’s mission, values, and competencies, which are paramount to achieve UN’s humanitarian mission and mandates (Figure 3 Below). Second, fairness of compensation packages is paramount, which is not only limited to the amount provided compared to the nature of the job and to the compensation of comparable jobs in or out the organization, but also to the way at which the compensation is provided as shown in the last below figure.
Organizations use several techniques to decide, review, and update their compensation packages, as shown in the first below figure. For example, the United Nations relies on comparable local and international labor markets to decide staff’s compensation via providing the highest available payments for comparable jobs locally or internationally as shown in the 2nd below figure.
End of Session
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