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Running head: TOTAL COMPENSATION PRACTICES

Total Compensation Practices

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TOTAL COMPENSATION PRACTICES

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Introduction

Employee turnover has been a continuing concern in the business industry. Managers and
employees desire justice and motivating total compensation at the workplaces. Today’s
organizations are operating in a dynamic, ever-evolving and competitive business environment.
As organizations continue to face mounting competitive pressures, they strive to achieve more
with fewer costs but with an improved quality (Al-Sarayrah, 2017). As goals for sales profit,
volume, quality, and innovation are raised, employment growth is highly supervised to ensure that
their output is aligned with the organization’s mission and vision. The achievement of desired
goals is largely based on the various adjustments and positive manipulations in the employment
field. Typically, the employee compensation system plays a significant role in the better
management of human resources in an organization.
Employee compensation is the total amount expected by an employee when working for
an organization. This element plays a significant role in fostering and maintaining a healthy
employment relationship. It is of critical importance to both the employer and the employee. Profit
and non-profit making organization offer different compensation packages for their employees.
Employees typically depend on wages and salaries to provide a large share of their income and on
benefits to provide income and health security. The decision of compensation highly influences
the engagement tactics of employers in an attempt to sell a product in a competitive market and
improve the organization performance (Saranya, 2016). In addition, compensation practices
influence the employer’s ability to compete for employees in the market, as well as their attitudes
and behaviors while with the employer. If the managers and the employers perceive the
compensation practices as equitable, they are less likely to leave for another job.
The compensation practices differ from organization to organization across the global
market. Ideally, they are based on employment units and several dimensions taken by the
organization leaders and managers. Various researchers and literature reviews offer discussions
and analysis that provide an understanding of why there are varieties of compensation practices in
an organization. Among the various kinds of budgets in an organization, the remuneration costs
remain part of great importance. Various studies have concluded that employees were open to
changing jobs and only a few of the workforce is open to full engagement of their jobs. The concept
of compensation in an organization lies as an attempt to attract and retain competent employees.
Over the years, compensation tactics have allowed organizations to enjoy fully the results of
employee job satisfaction. This paper analyses the concept of compensation practices in public
and non-profit making organization. It provides a brief overview of the compensation strategy and
the assessment of fringe benefits inclusive of the costs of health insurance coverage. Moreover, it
analyses the role of fringe benefits on employee morale and productivity and employee recruitment
and retention. The paper finalizes with a discussion of the impact of fringe benefits on the
millennial generation.
Compensation Strategy
Compensation is a reward received by an employee in an organization for the completion
of his or service. It does not simply contain direct currencies but also other forms, which can be
converted to currencies. It can entail a comfortable office, favorable interpersonal relationship
inside the organization, access to decision-making and offering a sense of achievement, which
cannot be typically measured in various currencies. In terms of marketing communication, a
compensation is a market form of human resource value, which is the respective contribution to

TOTAL COMPENSATION PRACTICES

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human capital. The total compensation practices are offered in a different organization such as the
health sector, Information Technology, Banking, and Insurance sector. Typically, the
compensation practices form part of a collaborative working culture and a reliable business
environment for both the employers and the employees.
Total compensation entails a combination of four core elements that comprise of pay,
benefits, financial incentives and non-financial compensation. This concept is also term as “total
pay”, “compensation package” and “direct and indirect compensation” (Saranya, 2016).
Compensation practices vary depending on employee position manager or hourly job. Total
compensation is evaluated for each level in the organization. It is concluded that various industries
rely on hourly employees...


Anonymous
Very useful material for studying!

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