Understanding Compensation for Employee

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January 16, 2010

Compensation is all of the benefits received by employees on the work of those employees on the organization. This can be either physical or non physical and must be calculated and provided to employees in accordance with the sacrifice he has given kep company where he worked.

Companies in providing compensation to workers prior to the calculation of the performance by making a fair performance appraisal system.

The system generally includes assessment criteria for each employee that is for example ranging from the number of jobs that can be solved, the speed of work, communication with other workers, behavior, knowledge of the work, and others sebainya.

The employee may calculate performance and sacrifice themselves with compensation received. If employees are not satisfied with the benefits gained, then he can try to find other jobs that reward better.

It’s quite dangerous for the company when competitors hire or hijack employees who feel satisfied because it can not divulge confidential company or organization.

A good compensation will provide some positive effects on the organization / company as follows below:

a. Getting good quality staff

b. Spur workers to work harder and achieve good achievement

c. Attract qualified job applicants from the existing vacancy

d. Easy in the implementation of the administrative and legal aspects

e. Has an advantage over rivals / competitors

The types of compensation given to employees, among others:

1. Rewards Ektrinsik

a. Ektrinsik benefits in the form of money, among others:

- Salaries

- Wages

- Honorarium

- Bonuses

- Commission

- Incentives

- Wages

- Etc.

b. Rewards ektrinsik shaped as a supplementary benefit or allowance example:

- Leave the money

- Meal allowance

- Money transportation or pickup

- Insurance

- Employees’ social security or social security

- Pensions

- Recreation

- A scholarship to continue studying

- Etc.

2. Intrinsic Rewards

Intrinsic rewards in the form that is not the physical shape and can only be felt in the form of the continuity of work, a clear career path, work environment, interesting work, and others.

There are three theories underlying the workers’ compensation, namely:

1. Theory of the Market Economy

The theory of market economy is the creation of a wage or price paid on the basis of bargaining strength negotiation, or negotiations between the workers, servants, employees, workers, and so forth with company management.

2. Theory of Living Standards

Standard theory of life is a compensation system in which wages or salary is determined by adjusting with decent living standards, where workers can enjoy a peaceful life, where, peaceful and prosperous retirement security cover in the old days, savings, education, shelter, transportation and etc..

3. Theory Paying Ability

Theory of ability to pay is a system of small and great determination of the compensation given to workers with matching levels of income and corporate profits. When the company was successful, then the employees are given additional benefits. But if the company suffered a loss, then the employees will also get a reduction in benefits.

Learning

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