Compensation
and benefits are the rewards that an employee get from the organization and
Armstrong (2009), has defined reward management as the process which articulate
and implement suitable policies and strategies to reword the employees based on
their value to the organization with fair, equal, and continuous manner. Thus,
it is important for the organization to value the employees and this can be
done through evaluating their performances. Further to have fair, equal, and continuous
process the performance management process should be also should be a fair,
equal, and continuous process. Further Weiss and Hartle (1997),
have stated that performance management as a process which creates a common
understanding about what and how to achieve where the employees will managed in
a manner to increase the probability of achieving success.
With a proper performance management system,
the organization can have a clear understanding on the dimensions which the
employee will value with a common understanding. The performances can be evaluated
against the agreed achievements and due to the fact that the all the employees
will evaluate under this process the organization can have an equality on
managing the performances of employees. Further the fairness will create through
the common understanding of the employee and the employer where both are agreed
on duties for a specific period of time. Since the performance management
process is conducted annually against the agreed tasks the continuity will be
secure. Therefore, it is important for a company to have a proper performance
management system which leads to create appropriate recognition and rewards of
the employees.
Based on the expectancy theories of
motivation developed by Vroom (1964) and Porter and Lawler (1968), it was
stated that motivation or the efforts of an employee is depending on the
ability to achieve the given task and the value of the reward that the employee
will get by achieving the task. Therefore, there is a link between the task and
the reward whereas the task should be achievable and the reward should be worth
enough to put such effort where in such a situation the employee will be motivated.
There for it is clear that if the employee will get a reward which is worth to
have and the efforts that he has to put in getting the reward is achievable the
employee will try as much as possible to get the reward whereas the appropriate
compensations and rewards will motivate the employee and increase the employee
engagement.
Even though the compensation and benefits motivate
the employee that is not the only way and the most suitable way to motivate the
employees to reduce employee attrition. At a time that the employee feels that
the reward is not sufficient or the task is not possible to achieve will lead
to reduce the motivation and the level of employee engagement with in the
employee and thus it is important to identify other factors that have an effect
on motivation of an employee. O’Neal (1998), has stated that organization
should not consider only rewards but should consider in total reward where
total reward consists with everything that an employee values in an employment
relationship with the employer. Further WorldatWork (2000), has stated that
total rewards are the all the tools which are available with an organization
that can be used to attract, retain, motivate and satisfy employees.
Further Manus and Graham (2003), have
defined total rewards as all the types of rewards which are direct as well as
indirect and intrinsic as well as extrinsic which further can be consider as
financial and non-financial rewards where the financial rewards are the transnational rewards and non-financial rewards are relational rewards.
(Source:
Adopted from Armstrong, M. (2009), Armstrong’s
Handbook of Human Resources Management Practice, 11th Edition,
London; Kogan Page, pp. 743)
Thus it
is clear that compensation and benefits are not sufficient and are not the only
way of motivating an employee and reduce attrition but the organizations should
consider the non-financial intrinsic rewards such as learning and development
where the employee feels the organization always take care to offer
opportunities for him to learn and develop within the organization and to have
an enjoyable working environment for employee to feel better in working such an
environment.
References
Armstrong, M. (2009), Armstrong’s Handbook of Human Resources Management Practice, 11th
Edition, London, Kogan Page.
Manus, T. M. & Graham, M. D. (2003), Creating a Total Rewards Strategy,
New York; American Management Association.
O’Neal, S. (1998), The phenomenon of total
rewards, ACA Journal, 7
(3), pp 8–14.
Porter, L. W. & Lawler, E. E. (1968), Managerial Attitudes and Performance,
Homewood; Irwin-Dorsey.
Vroom, V (1964) Work
and Motivation, New York; Wiley.
Weiss, T. B. &Hartle, F. (1997),
Re-engineering Performance Management, Breakthroughs in achievingstrategy
through people, Boca Raton; St Lucie Press.
WorldatWork (2000), Total Rewards: From
Strategy to Implementation, Scottsdale; WorldatWork.
Dear Gayan,
ReplyDeleteI also agree with you that Compensation and benefits is a main factor for employees contribution and the loyality towards an organization.It helps for a long term journey of an organization
Dear Gayan
ReplyDeleteYes agree withyou . Other than Compensation and benefits (salaries, perks, incentives etc ) most of employees are expecting high level of job satisfaction.
Dear Gayan
ReplyDeleteThis a very informative article and you have broadly covered the subject a an interesting way.
Compensation and benefit is the vital factor of motivating the employees in any organization and they should have a proper performance identifying and rewarding system to recognize the employees. Compensation to every employee is not equal and there should be a proper pre designed criteria and standards to reorganize the employee performance and reward accordingly.
As you have discussed about limiting to financial benefit is not enough in now a days and allowing ample opportunities for learning and development and work place experience is also included in reward for employee.
As far as the employee is satisfied with the rewards they receive, organization may continue there operation without struggling and failing in doing that may create union issues which will create unnecessary tide ups in work process of the organization and some times it may lead to a bankruptcy of the organization.