Employee Compensation - Essay Example

Employee motivation has been found to be closely related to compensation, work environment, and has significant influence on company productivity. People could not be forced to work and any coercion can only lead to conflict. Thus to improve company performance, employees will have to be adequately motivated and in this context we can discuss Maslow's hierarchy of needs theory or Mc Clelland's theory of achievement motivation. An understanding of the motivational dynamics is important for improved company performance although employee compensation seems to play a significant role within the environment and performance criteria.

It would be interesting to discuss to what extent employee motivation could be increased or decreased with added compensation and how incentives, bonuses or pay levels could affect the motivational processes at the workplace. Job performance is see as a function of ability and motivation and some of the factors that have been identified as important in the motivational process include one's own advancement in the field and in the job, type of work done and enjoyed by the employees that relate to job satisfaction as well as the company reputation or position of the company that could motivate individuals to keep up the competitive edge.

Building up a sense of morale and corporate social responsibility lies at the bottom of increasing employee motivation although the direct factors that seem to affect motivation are in fact largely related to pay benefits and compensation in the form of recognition and material incentives. Company performance is in fact related to how much the employees are compensated and paid for their efforts and this is also largely related to the extent of motivational factors that work in favor of the employees or the company.

Tuzovic and Bruhn (2005) argued that compensation systems are an important tool in fulfilling corporate goals as these systems help to link customer orientation with individual and organizational performance. There are some studies that prove the positive effects of using non financial compensation measures although linking pay to customer satisfaction may not always be the correct approach according to Tuzovic and Bruhn. Customer satisfaction could be related to customer retention and profitability of the company although the role of reward and compensation has to be identified in a positive way and for this the authors identify the necessity of a holistic reward and performance measurement model that could enable an organization to study the cause effect relationships that could link the rewards given to employees to the non financial performance measures.

Tuzovic and Bruhn (2005) provide a framework for a reward system that could allow organizations to understand how a reward strategy could be derived. An integrated and multi-dimensional methodology for performance evaluation has been proposed. Although here the focus is on integration of customer orientation, employee compensation and performance management within the