Reward can be characterized as remuneration and compensation given to employees in return for their services (Torrington Et al, 2014). Compensation shapes a significant subset of the complete rewards and contains those components that can be esteemed in money related terms (Jiang Et al, 2009). Compelling compensation technique regularly supports the achievement of the business as it is considered as one of the vital components to draw in and propel human capital. Herzberg attests that lacking compensation is one of the key components causing disappointment among employees.
Table of Contents
- INTRODUCTION
- Different Methods of Remuneration Packages given to Employees
- Performance-related pay scheme
- Profit-Sharing
- Piece-Based Remuneration
- Skill-Based Pay
- Flexible and Fringe Remuneration
- CONCLUSION
Objectives and Key Themes
The purpose of this essay is to examine different methods of employee compensation and their role in the vital management of HR for an organization, by revealing key strengths and weaknesses. The essay will finally conclude by investigating if one specific strategy for compensating employees fits all circumstances, or if one method is preferred over other methods of compensation.
- Different types of employee remuneration packages
- The impact of remuneration packages on employee motivation and performance
- The relationship between compensation strategies and long-term employee commitment
- The effectiveness of various compensation strategies in different organizational contexts
- The importance of considering individual needs and motivations when developing compensation plans
Chapter Summaries
- INTRODUCTION: This section defines compensation as a significant subset of rewards given to employees, emphasizing its importance in attracting and motivating human capital. It introduces the concept of employee motivation and discusses the essay's objective to analyze different compensation strategies and their effectiveness.
- Performance-related pay scheme: This section explores the advantages and disadvantages of performance-related pay schemes, which link employee compensation to their performance. While it offers benefits like improved motivation and attracting talent, it can also lead to unintended consequences like employees focusing solely on rewarded aspects and neglecting other important tasks.
- Profit-Sharing: This section focuses on remuneration plans that link employee compensation to the organization's profits. It highlights the potential for increased employee loyalty and a sense of belonging, but also points out a lack of clear evidence regarding the effectiveness of such plans.
- Piece-Based Remuneration: This section examines piece-based remuneration schemes, based on the quantity of goods produced or hours worked. It outlines the advantages of increased control over production and cost control but also points out potential drawbacks like increased stress and tension among employees.
- Skill-Based Pay: This section explores the benefits and challenges of skill-based pay, which compensates employees based on their acquired skills. It highlights the advantage of employee versatility but also acknowledges the risk of skills becoming obsolete and the potential loss of skilled employees due to competition.
- Flexible and Fringe Remuneration: This section defines fringe benefits as benefits in kind given to employees and discusses the increasing importance of flexible benefits, which offer choices to employees regarding their compensation package. While flexible benefits can increase employee motivation and contribute to attracting and retaining talent, they also pose challenges in terms of cost and administration.
Keywords
This essay focuses on key terms such as remuneration, compensation, employee motivation, performance-related pay, profit-sharing, piece-based remuneration, skill-based pay, flexible benefits, and employee commitment.
- Quote paper
- Jeff Anim Boateng (Author), 2020, The Various Methods of Remunerating Employees, Munich, GRIN Verlag, https://www.grin.com/document/963240
