The Importance Of Fair Compensation

Fair remuneration has been found over the years to be one of the policies the organization can adopt to increase their workers performance thereby enhancing the organization productivity. However, in today’s business environment of low wage and salary increase, pay has become an increasingly significant consideration for employee as they strive to maintain their standard of living Snell and Bohlander (2010). It therefore becomes imperative for organization to adopt compensation policy that employees will perceive as being fair and commensurate with their skills and expectations for them to be productive. This means that employees performance goes a long way in determining the success of the organization as well as the growth of the individual employee. Commenting on the importance of effective use of …show more content…
Compensation according to Dessler (2011) refers to all forms of pay going to employees and arising from their employment. For managers to improve organization’s productivity, they must adopt compensation policy that employees will perceive as being fair and commensurate with their skills and expectations. This call for the compensation philosophy to be adopted by managers of organizations, since a consistent philosophy provides a strong foundation for both the organization and the employees. Without a philosophy, leaders often find themselves unsure of what to offer as a starting salary for a new employee. This can lead to offering too high a total compensation package for a new employee in relation to existing employees, or being unable to successfully hire because the total compensation offer is too low to be competitive. The difference in performance is often related to the compensation philosophy adopted by organizational managers. Performance differences and organizational success have been attributed to the compensation policy adopted by the