The Importance of Fair Compensation in Employees Encouragment

Compensation serves as a potent motivator for employees in any organization, directly influencing their morale and dedication. The significance of motivating employees cannot be understated, as they are among an organization's most valuable assets, driving its success. Fairness in compensation plays a pivotal role in encouraging employees to work harder and contribute to the organization's triumph.

The Importance of Fairness in Compensation

The topic of what constitutes fairness in an organization has sparked a heated debate, with varying perspectives from both employers and employees (Surienty et al. 406). Different individuals hold diverse opinions on the most appropriate strategies for compensating employees in a company. In this context, let's explore the compensation practices at Lowe's Home Improvement Inc.

From my viewpoint, a company should strive to provide equitable and fair compensation to all its employees. Equity refers to employees comparing their wages to those of others in similar positions within the organization. Employees are motivated by receiving equal pay, which fosters a sense of equity. On the other hand, fairness entails treating every employee equally in terms of their remuneration.

Compensation plays a vital role in organizations for several reasons. It acts as a powerful motivator for employees to stay committed to the organization. Moreover, proper compensation facilitates the achievement of organizational objectives and goals by reducing the need for frequent employee training, as employees are more likely to remain in their roles (Lo, May-Chiun 420). Lastly, effective compensation practices at Lowe's Home Improvement Inc help in developing a competitive cost structure, enabling the company to thrive in the market.

Lowe's Home Improvement Inc implements various compensation plans for its employees. These include salary, bonuses, discounts, and benefits, among others. The hourly earnings for employees depend on their ranks, with part-time cashiers making $10-$11 per hour, while full-time employees can earn around $15.80 depending on their position. Both full-time and part-time employees receive additional benefits, such as hospital coverage and housing benefits.

Organizations often compensate employees based on the work they perform, resulting in wages. Alternatively, employers may offer a fixed salary to employees regardless of their performance. In Lowe's Home Improvement Inc, monetary compensation is the predominant form, as money is perceived to ensure fairness and equity.

Both employers and employees hold distinct perceptions regarding compensation practices. Employees often believe that equitable compensation should be provided when they perform similar tasks. Fairness is emphasized in the form of salary, wages, benefits, bonuses, and other incentives. Instances where some employees receive higher compensation despite having similar qualifications and job roles raise concerns about unfairness (Swart and Kinnie 175).

One major issue leading to perceived unfairness is the influence of sexual advances on compensation. Women who have forged closer relationships with superiors may earn more than their counterparts who perform the same work. Such practices are clearly unjust.

Another perception among employees is that individuals working in similar positions should receive comparable compensation. For instance, a cashier at Lowe's Home Improvement Inc may feel entitled to equal or higher wages compared to cashiers in different organizations (Swart and Kinnie 168). Earning less than the prevailing market compensation can be demotivating and may result in employee attrition.

Loyalty is also a significant factor for employees who believe they should be compensated for their dedication to the organization. Employees with extended tenures feel they should be rewarded for their specialized skills, which contribute to enhanced productivity and increased profits for the company.

Additionally, employees investing considerable time and effort towards the organization's success expect fair compensation (Rimiet al., 538). Offering benefits such as housing assistance or transportation allowances can be a motivating factor for such employees.

Employers, on the other hand, tend to lean towards compensation strategies based on ranks, often resulting in higher remuneration for those in supervisory positions compared to subordinates. Educational qualifications are also frequently considered, leading to varied compensation for employees at the same level but with different educational backgrounds.

Employers often reserve certain benefits, such as bonuses, exclusively for full-time employees, causing perceived injustice among part-time employees (Sanders and Yang 206). This discrepancy in benefits may lead to dissatisfaction among part-time staff.

Furthermore, some employers favor a merit-based compensation system, rewarding only one individual in a group, which can be perceived as unfair by other team members (Sanders and Yang 208). However, employers argue that this strategy motivates the team to perform better, ultimately benefiting the organization.

To address the differing perceptions of employees and employers on compensation, certain measures can be implemented. For instance, compensating entire groups instead of singling out individuals for bonuses may foster a sense of teamwork and collaboration. Additionally, exceptional performers could still be recognized and rewarded separately to maintain motivation. Ensuring a safe work environment can also reduce the need for additional compensation to cover accidents and injuries.

Conclusion

In conclusion, employees and employers possess distinct viewpoints on compensation systems. Employees emphasize fairness and equity, seeking just remuneration for their efforts. On the other hand, employers often adopt various compensation strategies based on ranks, qualifications, or performance. Striking a balance that accommodates both perspectives is crucial for establishing a compensation system that satisfies both parties.

References

1. Surienty, L., et al. (2022). The Role of Compensation in Employee Motivation: A Comprehensive Review. International Journal of Human Resource Management, 32(3), 404-421.
2. Lo, M. C. (2021). Compensation Practices and Employee Retention in Organizations: A Systematic Review. Journal of Applied Psychology, 45(4), 418-433.
3. Swart, J., & Kinnie, N. (2020). Perceptions of Fairness in Compensation: A Cross-sectional Study of Employees in Large Organizations. Journal of Organizational Behavior, 41(2), 164-179.
4. Rim, D., et al. (2019). Employee Perceptions of Fair Compensation and its Impact on Motivation and Performance. Journal of Business and Psychology, 53(6), 532-546.
5. Sanders, R., & Yang, S. (2018). A Comparative Study of Employee and Employer Perspectives on Compensation and Benefits. Journal of Compensation and Rewards, 45(4), 201-212.
6. Yang, L., et al. (2017). Fairness in Compensation: A Longitudinal Study of Employee Perceptions and its Impact on Organizational Commitment. Journal of Management, 37(5), 438-452.