Fair and equitable compensation acts as one of the main strategies used by companies to motivate employees to achieve the set goals in organizations. The system adopted by an organization helps organize the work environment, set clear objectives, and unify strategies for establishing compensation for different job performance. In many companies, one of the significant roles of Human Resource (HR) is to deal with the ever increasing pressure to attract and retain quality labor. Most HR are driven with the assumption that fair employee compensation is measured by the performance result of the employees’ achievement, and the level of payment is equitable both internally within a company and externally with the overall labor market (Tomar, 2011). The goal of any compensation system is to establish coherent and understandable principles for whom, what pay, and how much pay to ensure that employees remain motivated. At Google Limited Liability Company, compensation is an essential part of the HR, which enables the company to boast quality labor force. The company’s policy is based on equitable and fair compensation methods that extend to all of the organization’s employees. Google’s experience of compensation, promotions and performance rating is based on what the individuals do rather than who they are.
Google’s compensation plan has the main components similar to those found in other global technology companies. The plan has salaries and bonuses, a favorable working environment, and other benefits. However, one thing that makes Google outshine its competitors in terms of compensation is the ability to tailor the typical compensation components and to optimize them to attain corporate objectives. Salaries given by the company have always been above the industry standards as it strives to be the leading global organization in attracting quality employees. Google’s compensation system also includes workplace benefits. The organization holds that to ensure that employees remain entirely focused on working for the company, their efforts should be sufficiently compensated (Cowgill, Zitzewitz 2009). Hence, the organization has made an extra effort to offer employees with different incentives to ensure a favorable working environment. In issuing bonuses, the company sought employees’ view on whether they preferred salary raise or bonuses. The company found that employees prefer a 0.9 dollar salary compared to 1.0 dollar bonus increases since salary is permanent.
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Google, Inc. has a compensation scheme that helps the company achieve a competitive advantage in the global market in retaining and recruiting extremely talented employees from all over the world. The company’s compensation system has all benefits that an employee would need to get from an employer which include insurance plan and retirement programs. In ensuring employees’ compensation satisfaction, Google, LLC. has established a non-standard compensation plan which has made the company outstanding against its competitors. Some of the non-standard benefits include fringe benefits like employees allowed to convey their pets at work and pick up services (Soules, 2013). As an extension of the compensation strategy, the company has established an informal working environment that is believed to result in happy, more occupied and productive employees. The company also emphasizes on work-life balance and therefore implement policies that maintain a healthy balance. To ensure this healthy balance, Google offers flexible working hours for is employees and telecommunicating specific job opportunities to give employees chances to cater to their private lives. The company’s hour compensation has impressive consequences to the organization since the employees work to increase their productivity for the company.
In order to achieve a fair and equitable compensation strategy, Google constantly researches on both employees’ productivity and satisfaction. Unlike many companies which use across the board compensation increase, Google conducts a study on the employees to find out the value each employee place to the company before determining the amount of compensation. The company also uses conjoint analysis to establish the elements of compensation that are most rewarding to the employees. To come up with a unique compensation plan, the company considers several important decisions. The compensation decision is made in line with the company’s compensation philosophy. For instance, in 2016 research the company reported that it had a collection of market data from employees recruited to the company based on their previous salary at other technology companies (Hilsenrath, & Davis 2016). However, Google decided to give the highest compensation in the market by providing a 10 percent increase to all employees. Although it would be assumed that many employees at the company are top performers, this increase was more about the company’s mission to be the leaders in terms of compensation.
Sufficient compensation is essential and has a significant impact on an employee’s attitude and public presentation. Google offers paid clip off as one type of discretion benefit, which is above the market criterion. Since the company is focused on public presentation, the employees are given limitless ill leave. In a bid to show the value of the employees, the company offers eighteen weeks fully paid off for maternal leave in addition to more than three weeks paternal leave. The employees at Google are also able to maximize their potential as their families are covered through the wellness insurance provided by the company. Besides, the company at its head quarters has a doctor on sight who provides subsidized medical care for all employees. This eliminates employees’ waste of time as they go out to look for physicians (Cowgill, Zitzewitz 2009). On top of the retirement compensation plan, the company established a protection plan which included extra life insurance benefits. This plan ensures that in case of an employee death, the beneficiaries receive half the salary for an agreed period.
Effective compensation system does not only serve to benefit the employees but is also the company’s strategy to improve its products and services through securing the best talents in the market. Research has shown that Google company is one of the best organizations in terms of employees retention globally. The company appreciates the benefits of retaining top performers. The investment it makes on the employees reduces the turnover of top talents, which would cause devastating effects. Interestingly, the company has also been at the forefront of nurturing low performers. The company’s philosophy argues that low productivity is a management problem, and Google has a strong willingness to managing workers in a way that alternate them from roles that they are not successful. Compensation on performance, in this case, helps low performers at the company improve their skills to earn more salaries. The 10 percent overall increase in compensation is said to have been Google’s strategy to increase employees productivity (Cowgill, Zitzewitz 2009). The reimbursement tuition plan provided by the company helps to provide a progressive increase in employees’ productivity, which in turn increases the company’s output in addition to improving their working skills.
Google has a vision which has facilitated continuously the implementation of a unique compensation strategy in an attempt to retain the highest quality employees in the market. This unique strategy has helped to put the company ahead of the global competition, together with other companies such as Apple and Amazon.
References
Cowgill, B., & Zitzewitz, E. (2009). Incentive Effects of Equity Compensation: Employee Level Evidence from Google. Dartmouth Department of Economics working paper.
Hilsenrath, J., & Davis, B. (2016). America’s Dazzling Tech Boom Has a Downside: Not Enough Jobs. Wall Street Journal.
Soules, A. (2013). I Google, You Google, We Google... Against The Grain, 20(2). doi: 10.7771/2380-176x.2734
Tomar, A. (2011). Compensation in the Manufacturing Sector: Managerial Variable Pay and Benefits Schemes in an Indian Steel Company. Compensation & Benefits Review, 43(4), 227-235. doi: 10.1177/0886368711410167
