Compensation and Incentives flowchart

By : Tamer Moustafa

Date:01/12/2015

Compensation and Motivation

Compensation is a wide concept and it is defined as the total package in cash or any kind that is paid by an enterprise to an employee in return to the work done by the latter for a certain

period of time. It may include:

1-Salaries or wages.2-Cash allowance.3-Overtime pay.

4-Bonuses.5-Healthcare plan.

6-Vehicles or others that are provided for the personal use

of the employee.7-Paid time off and various

other types of compensation.

Motivation is creating the interest in doing a certain Job and this may be through:

1-Attention to each individual and assigning responsibilities.

2-Transparency.3- A defined career path and growth.

4-Training and development programs.

5-Fair pay and a good job match.6-Encouraging work/life balance.

7-The Use of team rewards.8-Rewarding high performance .

9-Recognition .

Factors affecting compensation and compensation effect on Motivation

Compensation Motivation

Internal factors(direct) that affect compensation

1-The ability of the organization to pay.

2-Employee performance, seniority and potential.3-Organisation strategy.

4-Position of the company in the business cycle.

5-Equity considerations.6-Good job analysis and job

evaluation.7-Productivity of workers.

External(indirect) factors that affect compensation

1-Laws and regulation.2-Labor market.

3-Economy.4-Inflation.

5-Demand and supply of labor.6-Union pressure.

7-Cost of living.

The increase in compensation will lead to

increased motivation but it is to be noted that

motivation doesn't t depend solely on

compensation.

Factors affecting the level of motivation:

1-Achievement 2-Recognition3- Work itself

4-Responsibility 5-Advancement

6-GrowthPresence o f these factors positively affect motivation.

Factors that will not increase motivation but there absence decreases

motivation (hygiene factors)

1-Company policy. 2-Supervision .

3-Relationship with Boss .4-Work conditions.

5-Salary.6-Relationship with

Peers.

References

1-MSG (n.d.) Compensation Management - Meaning and Important Concepts [Online] MSG. Available from :

http://www.managementstudyguide.com/compensation-management.htm [Accessed 01/12/2015]

2-WIKIPEDIA (2010) Compensation of employees [Online] Wikepedia.Org. Available from : https://en.wikipedia.org/wiki/Compensation_of_employees [Accessed 01/12/2015]

3- LAWYERMENT.COM (2011) What is Motivation? What are the Concepts of Motivation? [Online] Lawyerment.Com Available from : http://www.lawyerment.com/library/articles/Self_Improvement/Motivation/317.htm [Accessed 01/12/2015]

4- WIKIHOW.COM (n.d.) How to Motivate Your Employees [Online] Wikihow.com

Available from : http://www.wikihow.com/Motivate-Your-Employees [Accessed 01/12/2015]

5-WHAT IS HUMAN RESOURCE.COM (n.d.) Factors Influencing Employee Compensation [Online] What is human resource .Com

Available from : http://www.whatishumanresource.com/factors-influencing-employee-compensation [Accessed 01/12/2015]

6- MSG (n.d.) Factors affecting compensation-part 1 [Online] MSG Available from : http://www.managementstudyguide.com/factors-affecting-compensation.htm [Accessed 01/12/2015]

7-ACCOUNTING-MANAGEMENT (n.d.) Factors affecting compensation system.[Online] Accountlearning.Blogspot. Available from : http://accountlearning.blogspot.com.eg/2013/03/factors-affecting-compensation-system.html [Accessed 01/12/2015]

8- ARAB BRITISH ACADEMY FOR HIGHER EDUCATION (n.d.) Herzberg's Motivation-Hygiene Theory (Two Factor Theory) [Online] Abahe.Co.Uk Available from : http://www.abahe.co.uk/Free-En-Resources/Theories-of-Management/Herzberg-Motivation-Hygiene-Theory.pdf [Accessed 01/12/2015]