Compensation Packages Are Tools Used By Members Of Management Essay

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Compensation packages are tools used by members of management to further the existence of a company. Primary uses of compensation include recruitment, retention and reward. Using compensation to recruit and retain qualified employees is a commonality among employers and compensation levels for new hires are often set competitive to other employers seeking to hire from the same candidate pool. Compensation used as a reward for exceptional job performance is often in the form of bonuses or commissions. Internal and external factors affect total compensation packages and adjustments may be made as indicated by the necessities, goals and available resources of a business. Internal factors that influence employee compensation are capacity to pay, business methodology, work assessment/performance appraisal and employees. Large companies offer higher compensation than small firms and typically pay more than the competitive rate. Small firms, although at a disadvantage when trying to compete for skilled applicants, make up for the lack of monetary compensation in other areas like smaller workgroups with less demands and hours. Companies seeking to surpass the competition will offer higher pay than those satisfied with maintaining status quo. Job evaluations/performance appraisals provide employees with the opportunity to earn higher compensation and establishes fulfilling wage differentials. Employees themselves are by far one of the greatest compensation influences.
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