Management and Organizational Studies 1021A/B Chapter Notes - Chapter 3: Total Rewards, Piece Work, Employee Benefits
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MOS 1021A/B Full Course Notes
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Payment is a major consideration in hrm because it provides employees with a tangible reward for their services, as well as a source of recognition and livelihood. It is a big issue for the organizations as well, with compensation equalling to 20% of total expenditure in manufacturing firms and up to 80% in service firms. Total compensation (total rewards approach): direct compensation + indirect compensation. Direct compensation: employee wages, incentives, bonuses, and commissions. Indirect compensation: benefits such as dental plans and life insurances supplied by employer. Though the company sets guidelines about how much each position is worth, the manager has the responsibility to implement those guidelines, and therefore must have understanding of compensation and its link to success. Hr personnel may be responsible for gathering compensation information and developing approaches. Companies structure compensation in a way that enhances employee motivation and growth while aligning the employees" efforts with the objectives, philosophies, and culture of the organization.