Introduction
First, a proper compensation plan must ensure that there is a balance between the cost of labor and the motivation of the workers. Considerable attention should also be given to both the internal and the external equity. While Internal equity refers to the fairness of the compensation provided for similar work done by the employees, external equity is the regular comparison with other payment structures from other organizations. To ensure that there are equity and fairness, an organizational culture that promotes these values have to be developed. The rationale is, when employees perceive an organization to be fair, they tend to be more productive.
A human resource manager must strive to ensure that there is consistency with the set organizational standards. It is implemented by; ensuring that there is a consistent scale in regard to the payment of the employees. Regular analysis of job descriptions should also be done. Employees have the right to equal pay for similar services provided. The compensation must also conform to the market value of the labor. The rationale is to develop a just reward for the job provided (Arocas & Tang, 2015). Human rights activist aver that every human being has the inherent right to dignity. Importantly, the compensation offered must be not only fair and equitable but also satisfactory to the employees.
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Regular comparisons with competing organizations, it may be done at the union level or geographical area. Factors considered in selecting an organization to compare with include: size of the company and specialization. This is crucial in ensuring that an organization remains competitive. It also ensures that there is conformity with the market (Donoher, 2018). Market rules and standards are developed through consistent practices by organizations. The comparisons will help in adjusting the paychecks for the employees to ensure retention of staff. Subsequently, this promotes fairness and equity.
References
Donoher, W. J. (2018). Resource development and competing interests in distressed firms: examining the relationship between capital structure and competitiveness. Current Topics in Management: Volume 13, Global Perspectives on Strategy, Behavior, and Performance , 59.
Luna-Arocas, R., & Tang, T. L. P. (2015). Are you satisfied with your pay when you compare? It depends on your love of money, pay comparison standards, and culture. Journal of Business Ethics , 128 (2), 279-289.
