DQ: What is the effect of a total compensation package within a market-competitive pay plan on employee motivation and satisfaction?

HRM 635 Topic 7 DQ 1

DQ: What is the effect of a total compensation package within a market-competitive pay plan on employee motivation and satisfaction?

REPLY TO DISCUSSION

A compensation package is a summary of all the ways that a company directly or indirectly pays employees. Also known as a total compensation statement, the compensation plan describes details about how the employer pays employees and what non-financial benefits they offer(bing.com). HR professionals must be strategic to attract the right talent and retain employees. Offering an appealing and generous compensation package is an important part of your employee value propositionaihr.com).

Compensation serves several purposes, which include:

Recruitment and retention
Raising or maintaining employee morale
Rewarding high-performance workers
Achieving internal and external pay equity
Increasing employee loyalty
Leverage during union negotiations

These are just a few of the incentives included in a compensation plan. The plan is geared to assist organizations with maintaining employees and to provided resources and motivate staff to commit to long term and stable employment. To appeal to candidates in today’s job market employers must provide a competitive benefit package that employees want. Employees who are pleased with their compensation packages demonstrate increased morale in the workplace and are more motivated to work hard because they are assured that their hard work will be appreciated and appropriately compensated. When employees feel their integrity is respected, they will have a better outlook on the company and want to be more productive and inclusive in the organization. Building a total compensation package starts with understanding what your organization can offer and then organizing this information in an easy-to-read document. Remember, the purpose is to demonstrate to the candidate or employee all the rewards that they can expect because of working for your organization. Candidates, who are comparing offers, can clearly see what they could be enjoying if they work for your company.  A compensation package consists of direct compensation (cash) and indirect compensation (non-cash) rewards.

https://www.bing.com/search?q=total%20compensation%20package      https://www.aihr.com/blog/compensation-package/

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Good comments, thanks. Research has shown that money alone does not inspire higher performance and satisfaction levels from

DQ What is the effect of a total compensation package within a market-competitive pay plan on employee motivation and satisfaction.

employees. It is not only shown in research, but it is somewhat common sense that pay alone is not going to always improve performance or job satisfaction. My experience and consulting work has consistently shown the “work itself” and one’s “immediate supervisor” have more impact on job satisfaction than anything else. Even if the pay is great, if people have a poor relationship with their boss or dislike the work, they will leave the company eventually.

However it’s important to note that if it is perceived that pay is too low, then it can demotivate employees. Research shows that adequate pay brings employees to a relatively neutral state in terms of job satisfaction, but in terms of motivating employees beyond that, other psychological factors and rewards affect that more so.

In your opinion, why does one’s immediate boss have so much bearing on an employee’s job satisfaction and motivation, rather than pay alone? How can HR facilitate a positive relationship between managers and employees?

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Thank you for the great follow up question. In my opinion, the immediate leader has the power to implicitly support or demean the employee. When employees feel supported both personally and professionally, they are satisfied in their work and are often more engaged in their work. Compensation is an important component to employee satisfaction but alone it can’t fulfill the employees desire for feeling personally invested in. HR can facilitate a positive relationship between managers and employees by ensuring potential candidates have an understanding of job expectations and the work environment. HR should be a leader across the organization in developing a culture of  engagement, retention, and development (SHRM, 2022).

Reference

SHRM. (2022). Developing and sustaining employee engagement. https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/sustainingemployeeengagement.aspx

I agree with Crystal. This is a very important question and a very common issue in many organizations and is rarely evaluated and discussed with leaders or managers. A negative boss causes so much bearing because it is your immediate supervisor with who employees interact on the daily basis and having this toxic and negative environment takes a huge mental and physical turn on the employee. In the end, mental health is more important than good pay. I think HR can facilitate a positive relationship by providing different monthly seminars or training on Leadership and management for the supervisor & managers for support and guidance.

This is a very good point; I am an immediate supervisor and I have a firsthand and I am fully aware how we have so much bearing on our team members. We are management to them, decisions that affects them come directly from us, even if we have been asked by up level managers. This is why I am fully aware how to interact with my team members, I always like to take the pressure off their backs, I put myself in their situations and give them the benefits of the doubts. I try to motivate them in whatever ways, be it recognition or rewards system. Many years ago I learned satisfied employees are positive in their approach, they are motivated ,proactive, productive and committed to contributing to the organization’s goals.

Dessler (2017) states employee compensation includes all forms of pay going to employees and arising from their employment. This has direct financial payments (wages, salaries, incentives, commissions, and bonuses) and indirect financial payments (financial benefits like employer-paid insurance and vacations). The compensation plan should first advance the firm’s strategic aims management should produce an aligned reward strategy. This means creating a compensation package that produces the employee behaviors the firm needs to achieve its competitive strategy. These plans required research, Evaluate Different Compensation Models, Determine Costs, and verifying compliance with Federal and state laws.  Also, very important for the compensation plan must be at least equal to that offered by similar companies who might be interested in recruiting the same employees.

 

Reference

 

Dessler, G. (2017). Human Resource Management. (5th ed.) Pearson.

https://bibliu.com/app/#/view/books/9780134237268/epub/OPS/xhtml/fileP7000499205000000000000000013D02.html#page_320

 

Joyner,J(2022)Basic Strategic Pay Policies. Small Business.

https://smallbusiness.chron.com/design-compensation-strategy-73340.html

 

Hey Lis! I enjoyed reading your response and getting your perspective on this question. I appreciated that you pointed out that compensation should be a part of an organization’s strategic goals. In my organization we are realizing that as we set out our strategic goals. I think that links directly to what your last point was, you must be competitive. Especially in a day and age when workers are scarce and the talent is desperately needed.

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Today’s modern employee is well rounded. Not only is pay and work environment considered, but also benefits. Employees want the whole package when it comes to committing to a company and many times that is what keeps them there year after year. The total rewards concept is an important part of concept management (Dessler, 2016). Total rewards address the many needs of an employee that go beyond pay and bonuses. They show the employees that the organization understands their needs and respects them. “It includes not just traditional financial rewards, but also nonfinancial and intangible rewards such as recognition, the nature of the job/quality of work, career development opportunities, good relationships with managers and colleagues, organizational justice, trust in employees, feeling of being valued and involved, opportunities for promotion, and great work climate (Dessler, 2016, p. 722). I can speak to the total rewards concept in the aspect of being an employee in an organization that offers total rewards. In our HR portal, there is an option to see our total rewards from the organization. It includes everything that I could have possibly gained from the organization and puts a dollar amount to it. Its really eye opening to me, even as a leader, how much money my organization has put into my success through the years. Even in one year, including tuition reimbursement, 401k match, benefits, and trainings the dollar amount is quite substantial. It makes me feel very special and valued. Organizations should have a total rewards program and share this with staff often to improvement engagement by creating those feelings of importance and respect similar to what I feel when I look at mine.