Monday, May 23, 2011

Employee Remuneration and Motivation

This blogpost by the experts of would discuss about different concepts related to employee remuneration and their motivations.

Zugner and Ullrich (2007) defined remuneration as a tool that influences people to work hard. An organization can use different methods of remunerating to an employee. For example, some organizations provide fixed level of wages and salaries to employees that are according to the skills and position of the employees. Hartill (2009) said that managers provide higher remuneration to motivate the employees to improve their performance. Heneman and Werner (2005) described that most of managers use both monetary and non-monetary incentives to reward employees. Robbins (2009) and Heneman and Werner (2005) managers generally uses different types of monetary incentives such as basic pay that is directly to their work and other financial incentives such as pensions, clothing allowance, travel allowance, baby care allowance, transport and meal allowance in order to provide remuneration to employees.

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According to Wan (2008) current business managers are moving towards flexible salary and remuneration systems from traditional view that was fixed. The main emphasis of flexible remuneration system is achievement of goals, performance based pay and also there remains less emphasis on incrementing basic pay (Estay, Lakshman, and Pesme 2011). For example, most of UK organizations provide bonuses to employees that are based on accomplishment of a particular task and level of efficiency (Wan 2008). It also motivates employees to enhance their efficiency. It has been discussed by Perry, Mesch and Paarlberg (2006) that global trends of remuneration can be divided into three parts such as benefits, cash compensation and incentives.

In current scenario, organizations also develop a board level remuneration committee with the involvement of non-executives in order to build best remuneration practices. This committee has an effective control on organizations remuneration policies that helps in maintain remuneration practices (Australian Institute of Company Directors 2004). To create an effective remuneration process, many managers use a process that includes different parts such as analysis of current wage and incentives in a particular industry for same performance level of an employee, consideration of several laws and regulations related with remuneration policy and employee expectations (Armstrong, Murlis and Hay 2007). On the basis of this process, an organization can create an effective remuneration practice in which it adopts a flexible remuneration policy in order to manage different environmental changes.
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