employment : How Companies Compensate Their Employees – Parts 2

 By Shuki Stauber

 

 
Jobs Employment, Career Job, Employment Job

 

Compensation for work is differential, i.e. work of varying value is rewarded with different compensation. The base pay for a systems analyst is different from the base pay for a cleaning worker. The bonus for a quality sale will be higher for a lower quality sale, etc. On the other hand material compensation given to an employee as a person is supposed to be uniform, based on the principle of equality. Thus the holiday present the low-level worker receives should not be any different in value from the present a high-level manager receives. Both of them are human beings who are supposed to receive the gift as show of appreciation for being a member of the company’s staff, not in exchange for the level of performance or the centrality of their jobs.

An organization compensates its employees through several components. Each component has a different task in providing for the working person’s needs. For instance, base pay reflects skills and the area of responsibility, incentives are given for quantifiable performance, social benefits seek to create a sense of security relating to the employee’s future and appreciatory compensation expresses appreciation for exceptional work.

In this article we’ll survey base pay, the core of material compensation, which primarily reflects the value of the nexus between the employee’s skills and the amount of responsibility placed on his shoulders. Base pay is not necessarily determined by the worker’s abilities. However, it usually carries considerable weight in the total compensation package. Therefore it’s safe to assume the pay for a software engineer with a mediocre work record will be higher than the total pay for a warehouse worker with a good work record. The amount of the base pay is based on the typical pay level in the employment market, with its fluctuations, but it is also affected by various factors, such as the organization’s financial situation, which has direct repercussions on the amount budgeted for pay. A company where the situation is improving may decide, for instance, that the pay budget will be increased by 3% during the next year.