Free «Latest developments in compensation practice» UK Essay Paper
Many organizations fail to consider the impact of compensation practices on the perception of the employees on the organizational culture and climate. Researchers have shown that compensation practice have a great impact on the performance of an employee. Significantly, compensation practices have a great impact on the perception of organization culture by the employees.
Currently, compensation practices are influenced by the job description, job analysis and industry pays structures. The job descriptions define the requirements, responsibilities, duties, location, conditions, environment and other aspects of the job. For example, a chief accountant earns more than a teller in a large organization. Also, a project manager earns more than other project members.
Pay structures are extremely useful in standardizing compensation practices in the industry. The recent payment structures require an employee to be paid a certain payment level. The employees are graded according to their responsibilities and awarded the minimum wage according to their groups. However, unions often struggle for an increase in the salary of their union members. In this case, the pay for each job is agreed through collective bargaining.
Salary surveys, conducted by different research firms, indicate a huge difference between salaries paid to certain employees as compared to others. These surveys collect market and salary data from different respondents. These data include average salaries, cost of living indicators, inflation indicators and salary budget averages. Most organizations often purchase the results of these surveys to benchmark themselves against the market standards. These surveys are generally conducted within an industry or a specific geographical location.
The latest compensation practices also involve evaluating the jobs themselves. Managers have resulted to ranking jobs according to the level of qualification needed and amount of experience one has. An employee, who is highly qualified and has vast amounts of experience, will receive a huge paycheck. These latest compensation practices and trends are expected to change in time. Economic effects such as inflation and instability can greatly change these practices.
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