Download - Organization and Management Lesson 5 Compensation or Wages by Mary Krystle Dawn D. Sulleza
COMPENSATION/
WAGES & PERFORM
ANCE EVALUATI
ON
COMPENSATION/ WAGES-all forms of pay given by
employees to their employees for the
performance of their jobs
PERFORMANCE EVALUATIONa process undertaken by the
organization, usually done once a year, designed to
measure employees work performance
TYPES OF COMPENSATION
1.) DIRECT COMPENSATIONincludes workers’ salaries,
incentive pays, bonuses and commissions
2.) INDIRECT COMPENSATIONincludes benefits given by
employers other than financial remunerations; for example: travel educational and health
benefits, and others
3.) NONFINANCIAL COMPENSATIONincludes recognition programs,
being assigned to do rewarding jobs, or enjoying management
support, ideal work environment, and convenient
work hours
CONNECTING COMPENSATION TO ORGANIZATIONAL
OBJECTIVES
PAY EQUITYis among the important consideration in preparing compensation package.
It is based on the idea that an employees pay must be
commensurate to his or her effort.
NOTE: The daily minimum wage rate differs in relation to factors such as
geographic area and industry or sector. The National Wages and Productivity
Commission is the government agency concerned with minimum wage
determination in the country
COMPENSATION: A MOTIVATIONAL
FACTOR FOR EMPLOYEES
COMPENSATION PAYrepresents a reward that an
employee receives for good performance that contribute to
the company’s success
IN RELATION TO COMPENSATION
PAY, THE FOLLOWING
MUST BE CONSIDERED
1.) PAY EQUITYrelated to fairness; the Equity Theory
is a motivation theory focusing on employees response to the pay that
they receive and the feeling that they receive less or more than they
deserve.
2.) EXPECTANCY THEORYpredicts that employees are
motivated to work well because of the attractiveness of the
rewards or benefits that they may possibly receive from a job
assignment.
BASIS FOR COMPENSATION
1.) PIECEWORK BASISwhen pay is computed
according to the number of units produces
2.) HOURLY BASISwhen pay is computed
according to the number of work hours rendered
3.) DAILY BASISwhen pay is computed
according to the number of work days renders
4.) WEEKLY BASISwhen pay is computed
according to the number of work weeks rendered.
5.) MONTHLY BASISwhen pay is computed
according to the number of work months rendered
NOTE: Compensation rates are
influenced by internal and external factors.
INTERNAL FACTORSare the organizations compensation
policies, the importance of the job, the employee’s qualifications in
meeting the job requirements, and the employer’s financial stability.
EXTERNAL FACTORSinclude local and global market
conditions, labor supply, area/ regional wages, cost of living,
collective bargaining, and national and international laws.