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Fair and Equitable Compensation

Essay by   •  August 26, 2012  •  Research Paper  •  1,064 Words (5 Pages)  •  1,513 Views

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COLUMBIA COLLEGE

Fair and Equitable Compensation

Perspectives

Fair and equitable compensation would have to first be based on an organization's strategic plans and resources. For compensation to be fair and equitable, employees would have pay and benefits that do not give bias to one employee over another. In an organization, pay and benefits should be relative to the job responsibilities of a given position and then based on employee performance within a given level of responsibility.

The president of a company or organization definitely has much more responsibility, associated job duties, and therefore higher levels of stress than other employees. Because of this, the president of an organization should be at the top level of a pay structure scale. Below the top person in an organization there should be various levels to a pay structure. Gathering job descriptions, requirements for each position, and an importance rating of each position will help to develop an organized and fair pay structure.

Once a pay structure is developed and put into place, employees within a given pay structure should be paid at a relatively similar rate. Employee knowledge, experience, education, and performance would be reasons for differences in pay within a pay structure level. Someone who has more knowledge and experience should make more than someone who is just starting in a given job or career.

In determining raises and other compensation, merit pay systems seem to be fairer than seniority pay systems. The text states that seniority pay and longevity pay systems reward employees with periodic additions to base pay according to employees' length of service in performing their jobs. In my experience at working for an organization that uses seniority pay, there is not a lot of motivation to work harder than anyone else. If an employee is hired with a group of ten other people, all of them would receive the same raise at set timed intervals. After a year of employment, all eleven employees would be earning the same pay, regardless of job performance. Many organizations that use seniority pay do not offer a lot of opportunity for advancement which means there is very little motivation for employees to perform at their best levels.

Merit pay systems provide more motivation for employees to perform at their best. Many organizations use merit pay systems and employee evaluations to determine pay raises. If employees are being given raises based on performance, there is an obvious reason for motivation. In order for a merit based pay system to work employees must have a clear understanding of what is required and expected of them. Employees also must know that their evaluations will be fair and unbiased in order for the merit pay system to motivate. Some companies use peer evaluations, 360 degree evaluations, and other forms of evaluations so that employees feel the evaluation is just and fair. Another way to make sure that evaluations are accurate is to schedule them for more often than once a year. This way there is data to look at from throughout the year and there will be less room for error and basing a yearly evaluation entirely on more recent events.

In today's economy it may not be possible for an organization to offer extremely high pay. Other benefits can also be used to attract and retain quality employees. Everyone

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