The term compensation refers to all forms of financial returns and tangible benefits that employees receive as part of an employment relationship.
Compensation is typically divided into direct and indirect components. Direct compensation refers to financial remuneration, usually cash, and includes elements such as basic salary, overtime pay, bonuses, commissions and so forth.
Indirect compensation refers to the general category of employee benefits such as insurance schemes, vacations, sick leave, executive perquisites and so forth.
Compensation practices have important implications for organizations, individuals and society as a whole. Organizations are concerned with pay, not only because of its importance as a cost to doing business but also because it motivates important decisions of employees about taking a job, leaving a job and working on the job.
Employee benefits are in direct forms of compensation that are intended to maintain or improve the life of employees. They are means of attracting, retaining and motivating employees.
Factors that influence the level of compensation and benefit packages
- The ability of the firm to pay the wages/salaries and other benefits. This particularly refers to the firms’ financial position, it may want to give huge salaries but may not be able to afford it.
- The availability of the required personnel in the job markets i.e. the supply and demand of labour especially for technical, professional and managerial positions. If only a few people possess a given skill, their bargaining power will be very high. If more of them are available then their salaries will be less competitive.
- Compensation levels of other firms demanding the same personnel. Most firms strive to remain competitive even in terms of pay so that they don’t lose their personnel to competitors who pay more. In fact some firms readjust salaries to match those of competitors.
- Government policy. Usually the government sets the minimum wage and at the same time, gives regulations for equal pay for performance so that no one is discriminated against.
- External economic constraints such as inflation and interest rates. The environment in which a firm operates affects it directly and when there is a slump in the economy, it suffers and will not generate enough to compensate employees as may be planned.
- Trade unions - these increase the bargaining power of workers and an agreement may be reached to alter the existing compensation structure.
Kavungya answered the question on April 26, 2021 at 11:26
- Explain the ways in which a manager may apply motivation theories to achieve effective performance by employees in an organization.(Solved)
Explain the ways in which a manager may apply motivation theories to achieve effective performance by employees in an organization.
Date posted: April 26, 2021. Answers (1)
- In developing strategic plans for the future, it is important for a company to assess both its current and past performance.
Outline and discuss the following...(Solved)
In developing strategic plans for the future, it is important for a company to assess both its current and past performance.
Outline and discuss the following approaches in assessing the organizational performance.
a) The historical analysis of performance in comparison with the organization’s performance.
b) The analysis of industry norms in comparison with the relative performance of organizations in the same industry.
c) The analysis of the organization’s performance in comparison with the best performance through benchmarking.
Date posted: April 26, 2021. Answers (1)
- How might the concept of Business Process Re -engineering (BPR) be distinguished from other approaches to work design? Give examples to illustrate your answer.(Solved)
How might the concept of Business Process Re -engineering (BPR) be distinguished from other approaches to work design? Give examples to illustrate your answer.
Date posted: April 24, 2021. Answers (1)
- What steps would you advice management to take to prepare themselves to negotiate over a trade union’s claim for an increase in remuneration at a...(Solved)
What steps would you advice management to take to prepare themselves to negotiate over a trade union’s claim for an increase in remuneration at a time of economic downturn?
Date posted: April 24, 2021. Answers (1)
- How is visionary leadership different from charismatic leadership?(Solved)
How is visionary leadership different from charismatic leadership?
Date posted: April 24, 2021. Answers (1)
- What are the key characteristics of charismatic leaders?(Solved)
What are the key characteristics of charismatic leaders?
Date posted: April 24, 2021. Answers (1)
- The jobbing, batch and mass types of production have their own distinctive systems of operation and their own problems of production, planning and control.
Examine the...(Solved)
The jobbing, batch and mass types of production have their own distinctive systems of operation and their own problems of production, planning and control.
Examine the circumstances which would justify the adoption of:
a) jobbing production
b) batch production
c) flow/mass production
Date posted: April 24, 2021. Answers (1)
- Outline the role of committees and examine their importance as part of an organization's management structure.(Solved)
Outline the role of committees and examine their importance as part of an organization's management structure.
Date posted: April 24, 2021. Answers (1)
- Objectives are needed in every area where performance and results directly and vitally affect the survival and prosperity of the business. Discuss this statement and...(Solved)
Objectives are needed in every area where performance and results directly and vitally affect the survival and prosperity of the business. Discuss this statement and identify those key objectives considered to be most important to a business.
Date posted: April 24, 2021. Answers (1)
- Describe the traditional functions of channel intermediaries and comment on their applicability to services marketing.(Solved)
Describe the traditional functions of channel intermediaries and comment on their applicability to services marketing.
Date posted: April 24, 2021. Answers (1)
- Identify the major barriers to delegation.(Solved)
Identify the major barriers to delegation.
Date posted: April 24, 2021. Answers (1)
- Outline the factors that would influence a manager’s decision to delegate authority and assign subordinates.(Solved)
Outline the factors that would influence a manager’s decision to delegate authority and assign subordinates.
Date posted: April 24, 2021. Answers (1)
- Michael Porter suggests that “Competition in an industry is rooted in its underlying economics, and competitive forces exist that go well beyond established combatants in...(Solved)
Michael Porter suggests that “Competition in an industry is rooted in its underlying economics, and competitive forces exist that go well beyond established combatants in a particular industry. The problem for the strategist is to determine which of those forces are relevant, and to what extent”.
You are required to identify the five competitive forces in the environment of a firm and discuss the threat posed to the firm by each of those forces.
Date posted: April 24, 2021. Answers (1)
- Identify and discuss the principal factors that might influence the design of the structure of a major organization.(Solved)
Identify and discuss the principal factors that might influence the design of the structure of a major organization.
Date posted: April 24, 2021. Answers (1)
- Leadership is the process of influencing others to work willingly towards an organizations goals, and to the best of their capabilities. How far is it...(Solved)
Leadership is the process of influencing others to work willingly towards an organizations goals, and to the best of their capabilities. How far is it possible and desirable for managers to become leaders?
Date posted: April 24, 2021. Answers (1)
- Organizations are going through a period of major technological change, which is obviously a great challenge to management particularly in the area of employee resistance...(Solved)
Organizations are going through a period of major technological change, which is obviously a great challenge to management particularly in the area of employee resistance to change. Give reasons for employee resistance to change and the techniques, which may be used to overcome the resistance.
Date posted: April 24, 2021. Answers (1)
- Managers must live in two time dimensions at once: the present and the future and this inevitably causes a conflict between focusing on the present...(Solved)
Managers must live in two time dimensions at once: the present and the future and this inevitably causes a conflict between focusing on the present demands of the day and creating space in which to plan strategically for the opportunities for tomorrow.
How can managers improve their personal time management so that both these activities can be achieved effectively?
Date posted: April 24, 2021. Answers (1)
- Managers spend over eighty percent of their time communicating. Why is there need for effective communication in an organization and what steps should be taken...(Solved)
Managers spend over eighty percent of their time communicating. Why is there need for effective communication in an organization and what steps should be taken to ensure that organizational communication is improved?
Date posted: April 24, 2021. Answers (1)
- What are the drawbacks of control systems?(Solved)
What are the drawbacks of control systems?
Date posted: April 24, 2021. Answers (1)
- To manage organizations effectively, managers require effective control system. Identify and explain the control systems which may be used by a manager to monitor and...(Solved)
To manage organizations effectively, managers require effective control system. Identify and explain the control systems which may be used by a manager to monitor and accomplish tasks in an organization.
Date posted: April 24, 2021. Answers (1)