Using Compensation as a Change Agent - Essay Example

? Using Compensation as a Change Agent Introduction The business environment is ever changing in the present day industry. There are no fixed parameters of success for the business houses. It is needless to say that the manpower resources or the workforce of corporate houses are the primary assets which drive the business operations and turnover. The various forces of change include the changes in the competitive scenario, the emergence of the substitute products, the competitive market pricing of the products, the evolving changes in technology and the human resources of the organization that implements those changes. In order to respond to these forces of change and attain sustainability of the business, compensation could be identified as the change agent that influences the activities of recruiting, production levels, employee morale and the satisfaction level of the workforce (Gomez-Mejia, Berrone and Franco-Santos, 2010). Use of ccompensation as a change agent The compensation is the payment done by the business houses to their employees in exchange of the services provided by them in running the operation of the company. Compensation is an important aspect in the field of human resource management. Recruitment, productivity, moral, and employee and employer satisfaction are important terms in human resource management process. The human resource managers or the professionals use compensation as change agent in order to help the organization. The level of compensation is fixed by the organization depending on various factors such as the revenue earned, cost incurred by the company, total number of workers and the efficiency of the employee. The compensation offered to the employees could be one of the most important factors that determine the level of efficiency of work. The compensation offered to the employees takes into account the volume of output required from the employee and the versatility of the employee to manage different areas of operation. Thus compensation drives the required actions necessary for achieving the objectives and goals of the organization. The level of compensation creates a brand image for the company among the several stakeholders including the employees, customers, etc. As an agent to drive the required changes in the company and establish its position in the industry, compensation could be one of the most effective factors. How organizations can utilize compensation to help with and affects recruiting employees, retaining employees, boosting productivity, boosting morale, boosting satisfaction Rrecruiting employees Compensation as an agent of change significantly impacts the recruiting activity of the organization. The compensation is mentioned upright on the job advertisement which is taken into consideration by the candidates before applying for the job. Although the volume of applications does not decide the quality of the candidates, a higher level of compensation, however, allows the company to select a candidate with superior skills and competencies as per the requirement of the company. Thus, the barriers to recruiting the candidates could be removed by offering a higher level of compensation (Tropman, 2002). The process of recruiting is aimed at selecting the right candidate required for driving the activities for implementing the changes. The limitations of the competency level of the candidate to be selected could be removed with the help of offering a suitable compensation. The compensation level, therefore acts as the agent that could drive the forces of change. Retaining employees Employee retention is one of the important factors of all organization. Responsibility of higher employee retention rate goes to the mainly the human resource department. In the current competitive business environment, getting skilled employees has very much difficult similar to as getting potential customers. Therefore, the organizations have started focusing on employee retention along the customer retention. According to Maslow’s hierarchy of needs model, compensation is the main and basic needs of the employees for their survival in the society. Therefore, providing feasible compensation to the employees according to their knowledge, skills, job responsibility, work pressure and designation is one of the important ethical business practices of the employers. This also helps the employers to save cost frequent recruitment due to achievement of higher employee retention. As compensation is the only objective of employees to work in an organization, it can definitely be used as change agent tool for retaining employees. It can be possible through increment of compensation in frequent interval for the employees with good performance. It is true fact that positive change in compensation in case of increment leads to much more rise in output from the employees. Therefore, compensation can be used as a stimulator for boosting retention along with performance. Boosting productivity Human Resource managers offered compensation to the employees in order to increase the level of productivity of the organization. The productivity of the organization is the rate of production of the company. The production levels are executed by the workforce of the organization. The level of compensation would definitely catalyze the process of production. It is obvious that the organization would offer more compensation to the workers who are capable of more productivity. An increase in the compensation level would help the human resource department of the organization to engage human resources who are more competent than the population. Thus, by offering more compensation, the organization would be able to make use of the enhance level of skill and knowledge of the man power resources who are expected to contribute more to the level of productivity of the companies (Singh, 2007). The increased level of productivity would help the company to establish a change in the competitive scenario. Thus, by impacting the productivity level, compensation would act as an important agent of change. Boosting morale It is important for the HR professionals to focus on effective compensation distribution process in order to increase employee morale. Level of compensation distribution has both negative and positive effects on employee morale. Low level of compensation distribution affect the performance level of the employees as it reduces the level of motivation and confidence towards the work (Prywess, 2000). It can force the employees to undertake several unethical steps to maximize their income. In addition to this, distribution of compensation highly depends upon the effective performance appraisal process. Inadequate performance appraisal can create biasness in the decision making process that can affect the performance of entire team within the workplace. On the other hand, ethical and effective compensation distribution can satisfy the morale level of the employees. It can empower the leadership and decision making process that can be highly beneficial for the organization. Therefore, the human resource department of the organization should try to provide significant compensation amount against their hard work and effective performance. Boosting employee satisfaction Compensation or incentive compensation has great impact on employee satisfaction. Organizations need motivated and skilled employees in order to achieve significant business growth rate. Several leading organizations effectively focus on effective compensation distribution process in order to motivate the employees towards their job responsibility. Effective incentive compensation distribution is a part of job satisfaction that increases performance level of the employees. Less compensation or unethical compensation distribution can create several types of conflicts within the workplace. First of all, it can affect the motivation level of the employees. Each and every employee gives their 100% in workplace in order to achieve high compensation and lucrative reward. Therefore, the HR professionals of organization should try to motivate the employees by providing appropriate and proper compensation. However, low compensation scheme can ultimately affect the business performance of an organization in this competitive global business environment. In addition, low compensation can force or encourage the employees to follow unethical path to maximize their income. It can hamper the reputation of the organization within the business environment. Therefore, the human resource management of the organizations must understand the significance of high compensation. Ccompensation is all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship Employee management is the most critical and complex task for the human resource professionals. The human resource management needs to manage compensation distribution process in an effective way. Effective compensation distribution will help the employer to keep their employees motivated. Low compensation distribution, poor working conditions and highly competitive working atmosphere contribute to workplace conflicts and job dissatisfaction. It can affect the decision making and strategy development process of the employers. It is important for the human resource managers to follow ethical compensation structure. Ethical compensation policy helps an employer to avoid several types of workplace conflicts and challenges (Farrell, 2009). When people lose their jobs or get low salary or compensation in spite of hard work and positive efforts, several workplace conflicts among the employees and management team can be developed. Low job satisfaction is the major consequence of inadequate distribution of compensation. There are several types of compensation such as festival bonus pay, overtime pay, shift allowances and reward for impressive performance. The human resource management has to fulfill the demand of the employees according to the developed organizational policy. It can help the employer to maintain all the teams within the workforce. Conclusion The level of compensation is an important agent of change and the companies required to respond to these changes in order to attain sustainability in the business. As agent of change, compensation helps the companies to improve in the several aspects of its operation and thereby gain competitive advantage. It is important for the managers to focus on effective compensation process. Significant compensation distribution will motivate the employees to perform effectively. The level of compensation offered by the company should match with the required skill and competencies in the areas of its operations in order to fulfill its goals. Thus by offering a better compensation the organization would be able to recruit a more skilled and competent workforce. This would help the company to increase its productivity levels and brig about changes in the competitive environment with steps like fixation of competitive price, better customer service, etc. It can be stated that compensation can be considered as important change agent that can help the human resource department of the organization in several aspects, such as recruiting, productivity, and morale as well as employer/employee satisfaction. References Farrell, B. (2009). Human Capital. New York: DIANE Publishing. Gomez-Mejia, L., Berrone, P. and Franco-Santos, M. (2010). Compensation and Organizational Performance: Theory, Research, and Practice. USA: M.E. Sharpe. Prywess, R. (2000). The United States labor force. New York: Greenwood Publishing Group. Singh. J. (2007). Compensation and Reward Management. India: Excel Books India. Tropman, J. (2002). The Compensation Solution: How to Develop an Employee-Driven Rewards System. USA: John Wiley & Sons. Read More