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Total Compensation Methods
The importance of a company's ability to maintain a balance between employee and company interests is significant. According to HR Guide (2006) compensation is defined as
The methods and practices of maintaining a good balance in company interests of operating within fiscal budgets and attracting, developing, retaining, and rewarding high quality staff through wages and salaries, which are competitive with the prevailing rates for similar employment in the labor markets.
An organization with good compensation benefits will be productive and attractive to employees. Knowing the effects of compensation on organizational culture and performance, how to deliver compensation directly and indirectly to diverse workforces and having performance measures in place will influence a company's success. This paper will detail the impact of compensation methods and benefit programs on employees and organizations.
Compensations Effect on Organizational Culture
A strong awareness of the overall job market is necessary for any organization that wishes to successfully hire a job candidate who will understand and be able to participate in the organization's culture. The salaries paid by an organization considerably affect the type of job candidates who will seek a position within the organization. For example, an organization which continues to pay its employees less than average wages will see a gradual decline in both the morale and effectiveness of its workforce. The reason for such a decline is that the culture of any organization is dictated by an employee's sense of self worth. If an employee believes that he or she is not being paid a fair wage, it will ...