Direct Financial Compensation Comprises of Not Only

¶ … direct financial compensation comprises of not only wages but also salaries, bonuses, as well as commissions; indirect financial compensation comprises of other rewards such as insurance, vacation, and childcare.

Each individual's pay in the U.S. is set relative to a number of groups (three to be specific) namely: group A, group B, and group C. With regard to group A (pay-level decision), employers can be able to evaluate how reasonable their pay levels are by simply determining what other employees doing similar jobs in other organizations earn. Next, group B (pay-structure decision) comes in handy in the determination of pay differences between the various organizational hierarchy levels. Lastly, when it comes to group C (individual pay determination), it is important to ensure that the level of pay can be regarded internally equitable. In this case, job relativities should ideally be reflected in the determination of the rates of pay.

Pay satisfaction is essentially the general attitude individuals have towards pay. It denotes how content employees are with regard to the fairness of their pay. In addition to being difficult to measure, pay satisfaction cannot also be easily related to a compensation system. This is largely because the same is largely individualistic -- what is regarded fair by one individual could be deemed unfair by another.

4. Productivity and pay have been linked since the Babylonian days. It is however important to note that there is no consensus with regard to how the two actually relate. This is particularly the case given that there are those who believe that people's perception of money and the value they attach to the same varies significantly. Over time, various theories have been proposed in an attempt to chart the relationship between pay and productivity. These theories include but they are not limited to the hungry man theory and the economic man theory. While the economic man theory is founded on the premise that additional pay (based on performance) would increase productivity, the hungry man theory is of the opinion that increasing the amount of money paid to workers could over time affect productivity negatively.

5. In basic terms, equal pay has got to do with ensuring that the remuneration employees receive for similar work is equitable. Equal pay therefore seeks to promote non-discrimination in the workplace. Comparable worth on the other hand "attempts to prove that employers systematically discriminate by paying women less that their work is worth." The relevance of these concepts cannot be overstated especially when it comes to compliance with the various wage controls and regulations that prohibit any form of discrimination in the workplace.

6. Compensation would play a significant role in the identification of an appropriate location for a new office housing approximately 300 employees. In this case, I would have to take into consideration the cost of labor in the locality selected so as to determine whether the organization would be able to pay workers while at the same time maintaining a reasonable profit margin.

7. To determine whether a pay survey I intend to purchase has the relevant characteristics of particular value to my organization, I would in addition to identifying the geography it covers also seek to determine how well it relates to the industry my organization operates in. Of key concern in this case would be the organizations surveyed. I would also gauge its credibility and reliability by first verifying the competence of its author.

8. The pay-structure decision relates to decisions made in an attempt to determine the appropriate compensation for employees based on the organization's job structure. On the other hand, job evaluation "is a formal process by which the relative worth of various jobs is determined for pay purposes." Managers can use the results of a job evaluation to build a pay structure as the said results help in the identification of not only the skills but also the effort required to do a specific job.