Fair Compensation Essay

Compensation is a method used to balance a fiscal budget and attract, develop, retain and reward high performing staff through wages. Company leaders use compensation to make sure that each employee has objectives supporting personal development while staying aligned with team and company direction. The company wants to ensure the employees have a clear understanding of these objectives and how they are doing against them so they can adjust immediately if necessary. Leaders must find the best effective compensation plan against the budget and local job market restraints to maximize motivation and retention. Company leaders should provide clear communication of objectives and results so employees understand their objectives, results and compensation. According to Ferreira and Nanda Baidya, financial rewards are considered extrinsic because they …show more content…
When organizations invest in its employee’s compensation it ensures a reasonably fair return (Kanungo, Mendonca, 1988). Compensation will be viewed as fair by the employee if it is designed with a job analysis, job description, and pay structure. Pay is one component of a compensation plan. A competitive salary plays a part in how satisfied employees are within the organization. When employees are satisfied with the pay received for performance the employee will not look for another job with the competition. Employers should want to offer employees fair compensation. That is way it is important to ensure employees are paid fairly for the duties performed. Employees will work hard at accomplishing established goals of the organization when he or she knows that they are being compensated fairly compared to the benefit and compensation packages that are offered by competitors. Unfair compensation is the top reason high performing employees decide to leave a company and work for the