For some reasons, after remodeling this site the platform removed the previous blog posts. I will try to work with support in order to get those back.
But this week I read chapters 10 and 11 from the book and the mandatory articles. Starting from the chapter 10 - Managing Compensations. There is three different kinds of compensations: Base compensations, pay incentives, and benefits or indirect compensations. Base compensations is a fixed pay on a regular basis. Pay incentives are programs that have been designed to reward good performances and benefits could be like health insurance, vacations, or having a car from the company.
It's important for the company to design a compensation plan that is effective and at the same time if fits to the company's culture. There are lots of things managers need to consider when creating a compensation plan, for example:
The two categories for compensation tools are job-based approaches and skill-based approaches. Job-based compensation has three major components. To achieve internal equity, companies use job evaluation to assess the value of jobs in the company. To achieve external equity, they use data of salaries on benchmark or set a pay policy by browsing key job market surveys. The third component is to achieve equity for individuals. Using the combination of experience, skills, seniority, and performance to create worker's position within the pay range for their job.
In the U.S. There is major federal laws governing major compensation practices. They are called the Fair Labor Standards Act (It has covered minimum wage, overtime payments and guidelines for classifying employees as exempt or nonexempt), Equal pay act, and the Internal Revenue Code. Some countries and municipalities have comparable legislation, which stands for comparable pay for jobs that require skills, effort, and responsibilities and have comparable working conditions, even if the contend of job is different.
The first mandatory article I read, was written by Kevin Krouse to the Forbes Magazine, about employee engagement. He started well describing what it is not: such as employee happiness or employee satisfaction. Employee engagement means employee's emotional commitment to organization and its goals (Krouse, K. 2012). In that case, the software developer works overtime when needed without being asked. Workers clean up together their environment for example keeping the floors clean even if the boss is not there watching (Krouse, K. 2012).
According to the article, companies with engaged workers have 6% higher net profit margins and these companies have five times higher shareholder returns over five years. Engaged Employees lead to:
An article from entrepreneur.com describes well also about rewarding employees the factor that not necessarily is money. They want to feel acknowledged and appreciated by the managers, which was also included in the second Forbes mandatory article.
Second mandatory article was written by Mike Kappel in 2018 to Forbes Magazine as well. He writes about how to build and establish an employee management culture into a company. He introduces the 5 ways to encourage employee engagement.
On the chapter 11 from our book the concept of Pay-for-Performance is clarified and studied well. The major challenges come when the workers won't feel like doing the intangible things they don't directly get paid for. Individual performance is difficult to measure and the payment strategy should be carefully considered. There is different types of salary combinations. Some of them are just provision, some have lower base salary with some provision, and then higher salary with smaller additions to it. They fit well in different situations, that should be every time thought well through before implementing them.
Entrepreneur. The Best Ways to Reward Employees. https://www.entrepreneur.com/article/75340 accessed on 30.3.2019
Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London. ISBN-10: 1292097248 accessed on 30.3.2019
Kappel, M. 2018 Forbes. How to Establish a Culture of Employee Engagement. https://www.forbes.com/sites/mikekappel/2018/01/04/how-to-establish-a-culture-of-employee-engagement/#64fd84b78dc4
Kruse, K. 2012. Forbes. What Is Employee Engagement. https://www.forbes.com/sites/kevinkruse/2012/06/22/employee-engagement-what-and-why/#5a9b5aa27f37 accessed on 30.3.2019