Definition and Importance of Employee Compensation in Organizations Essay

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In every economy, workers play a pivotal role in promoting its wellbeing. The more productive the workers, the better will be the economy. However, employees need motivation in order to maintain a high level of performance. One way through which this can be done is through compensation.

General Overview

Compensation is the reward to employees for the amount of work they have done in a specific time period. In the modern world, people’s view on employee compensation has significantly changed. In the olden days, people were more concerned about the wages with less attention given to the working conditions.

This is despite of the significant impact the working environment can have on the overall performance of employees. No much attention was paid in an effort to motivate employees. In fact, employees were viewed like any other instrument in the organization, which can easily be replaced. In other words, employees were not valued.

With time, the situation has completely changed. Employees are more concerned about the working environment which has forced the employers as well as the government to act accordingly. These changes were triggered by increased cases of strikes, violence, labor disputes and work slow down. Consequently, this has forced employers and other concerned parties to put more emphasis on the issue of employee compensation.

Discussion

There have been various attempts to ensure fair compensation for employees. The government has implemented several acts all of which are aimed at preventing exploitation of employees by their employers.

One of these acts is the Fair Labor and Standards Act of 1938. This act seeks to address the issues relating to compensation, unfair or long working hours and unfavorable working conditions (Whittaker, 2003). The United States department of labor is obliged with the duties of enforcing this act. The act is also related with the minimum wage. The minimum wage applies for all those who are covered and nonexempt workers (Anonymous. 2008).

The main aim of the minimum wage is to ensure that employees get just compensation. On the other hand, overtime regulation ensures that employers do not distribute the overtime discriminatively. Moreover, employers are supposed to give a relatively higher compensation when employees work overtime. However, there are some cases where there is exemption from Fair Labor and Standards Act wage and hour overtime criteria.

These include professional exemptions, administrative exemption, executive exemption and the highly paid employees. When employees receive a fair compensation, they will be motivated to work hard. This will improve on their productive levels. This will also reduce wastage of time through strikes and negotiations.

Later, the Equal Pay Act was formed. The main reason for its formation was to promote gender equality in compensation (Solotoff & Kramer, 1994). People were arguing that men and women should be rewarded equally for the same job. In other words, this act proposed that employees should be treated equally when working under the same conditions and performing duties which requires skills, responsibility and effort. In this case, employees must be treated equally.

In an effort to match the salary with the prevailing economic situations, employers are expected to adjust the salaries accordingly. The salary should be adjusted proportionally with respect to inflation levels in order to maintain the purchasing power of the employees. This also helps in maintaining a reasonable standard of living.

Conclusion

In conclusion, this discussion has clearly shown that the issue of employee compensation is of great significance in the contemporary world. The discussion has revealed that the productivity of employees can be improved by providing employees with a fair compensation from all aspects. That is, from financial compensation to the condition of the working environment. Every organization should, therefore, apply all the necessary effort to ensure that employees get necessary compensation.

Reference List

Anonymous. (2008). Fair Labor Standards Act; Title 29-Labor Chapter 8. Web.

Solotoff, L. & Kramer, H. (1994). Sex discrimination and sexual harassment in the workplace. Law Journal Press; 1588520625, 9781588520623.

Whittaker, W. (2003). The Fair Labor Standards Act. New York: Nova Publishers.

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IvyPanda. (2019, March 14). Definition and Importance of Employee Compensation in Organizations. https://ivypanda.com/essays/employee-compensation/

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IvyPanda. 2019. "Definition and Importance of Employee Compensation in Organizations." March 14, 2019. https://ivypanda.com/essays/employee-compensation/.

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