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.