Lesson 3 Pay & Compensation, strategic & Practical Approaches Essay

Lesson 3 Pay & Compensation, strategic & Practical Approaches Essay

Lesson 3 Pay & Compensation, strategic & Practical Approaches Essay

Business activities are crucial economic pillars at national and international levels, which should meet governments’ and individuals’ needs. Competition in business has resulted in the provision of high-quality goods and services to the market. The quality of production depends on various factors like the working conditions of the employees. Employee’s compensation leads to job satisfaction and commitment to the job (Prasetio et al., 2019). Businesses and organizations offering enticing benefits such as better compensation to motivate employees are likely to get highly qualified and willing workers.

Compensation occurs out of an agreement between two or more parties, whereby one party gets paid for goods or services as per the agreement. Mabaso and Dlamini (2018) define compensation as a financial or non-financial tangible reward that an employee receives from the employer for the skills, time, and efforts committed to achieving organizational objectives. The employer can conduct compensation benchmarking before deciding on compensation rates for his employees, which motivate and retain the employees. Compensation benchmarking is a process of tracing the most suitable compensation for employees with particular qualifications or in certain positions by considering the related information from external sources (Harrison, 2019). Therefore benchmarking is aimed at ensuring that a business gets and retains the best employees.

The Team Management Activity and Reflection paper

Scholars and researchers express diverse opinions on the main steps to follow during the introduction of an effective benchmarking process. Alosani et al. (2016) list five benchmarking steps which include; deciding what to benchmark, determining the starting point and aims of benchmarking, electing a suitable partner, obtaining the required information from the partner, and improving while applying the learned lessons. However, Topado (2021) compresses compensation benchmarking into three steps manely; choosing data sources that are in line with the business needs, application of the business’s compensation strategy to the data, and creating salary ranges. Therefore, the steps may differ with the scholar’s elaboration although they follow a similar order, and cover related areas.

Compensation benchmarking is a critical step towards the success of an organization. Benchmarking can make a business avoid collapsing and rise to superiority compared with other businesses. Therefore, compensation motivates employees and makes them express interest in the organization’s activities.

Excluding salary, should all employees enjoy access to exactly the same compensation benefits (fringe benefits, deferred compensation, and retirement plan benefits) regardless of job description? Why or why not?

Task 3: Pay & Compensation; Strategic & Practical Approaches Essay

Lesson 3 Pay & Compensation, strategic & Practical Approaches Essay