Research On Compensation And Benefits In Employee Motivation Business Essay

2510 words (10 pages) Essay in Business

5/12/16 Business Reference this

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Abstract (executive summary)

One of the biggest challenges facing business entities is the recruitment and retaining employees especially in the 21st century where the interest of employees is not getting employed, but rather in getting satisfaction in their jobs. Many employees come from houses and environments that are violent and chaotic. In the job, such kind of an employee needs to feel happy and forget the home problems. Consequently, employees move from one job to another in search of this environment. One of the ways of keeping these employees is to motivate them, a subject very complex, broad and expensive. The research carried out identifies compensation and benefits of keeping such employees in addition to the other motivational factors.


Employees can very committed to the work assigned and be working very hard. However, if their hard work is not seen and appreciated, they become demoralized and their productivity may diminish considerably (Werner, and DeSimone, 2009). It is believed that human resource is the most valuable and delicate asset of a business though never included in the balance sheet of the corporation. Mistreating them will make the productivity of the business go down and consequently collapse, while appreciating their efforts will encourage them more leading to more production thus growth, development, and expansion of the business with the goals, objectives, vision, and mission in the mind in a bid to achieve them (McNamara).

Motivation is one of the factors that keep employees on board, motivates them to work harder and better thus leading to increased productivity and growth of the business. Without motivation, productivity, morale, profits, product, and service delivery becomes at stake. It may be external or internal in nature (Werner, and DeSimone, 2009). The external motivation factors include the non-related work environment including both financial and non-financial aspects. On the other hand, the internal factors are those related to working environment that may include good working relationship, clean working environment and probably use of appropriate tools.

Whether internal or external, there should be motivation. Compensation and benefits are reward based motivational factors. Benefit is an indirect reward that an employee gets for being part of the family or the organization (Mathis, and Jackson, 2008). On the other hand, compensation entails the reward that is given to an employee to complement the time or any resource that he might have used. This is going to be the basis of my research and as I present this research paper together with the recommendation, I believe it will see the company go further. Through developing the right strategic planning, steps are going to be taken to support the motivation of your employees (Mathis, and Jackson, 2008).

Problem Statement

Many organizations including our organization have found it difficult to retain good employees and enhance their productivity. We lose employees to other organizations, especially our competitors who offer them good packages putting our strategies to dealing with the competitors at risk. As a human resource manager, I have come to realize that this is really affecting our organization. After a seriously consultation, there is need for us to come up with strategies that will see us retain most of our employees and improve the company’s productivity. As a result, the human resource management team has decided to develop strategy that will compensate our employees increasing the production of the company by 25% in the next 5 years.

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Review of literature of the recent opinions

Abraham Maslow Hierarchy of needs

According to Abraham Maslow’s hierarchy of need, different people are at different level of satisfaction. Discovering which level each employee is at may be difficult complicating the idea behind motivational (Podmoroff, 2005). This aspect of challenge is termed management challenge. It is believed that in the past a person would work for a company for very long period unlike to day where a person within a short span of time has worked for more companies (Podmoroff, 2005). It is there fore very right to assume that employees no longer look for job as a security rather to achieve certain satisfaction, no wonder one keeps on moving from one job to the other. It is therefore very important that in the event that the company wants to keep employees long enough to achieve its goals, we must be keen in motivating them (Javitich, 2004).

Fredrick Herzberg’s theory of Hygiene and Motivational Factors

This theory was developed based on the needs identified by the Abraham’s hierarchy of needs. Herzberg divided these needs into two fold; needs focusing on survival while the other need emphasizing on personal growth, very important factors that employees would want in a job (Werner, and DeSimone, 2009). According to him, any factor that satisfies the survival need cannot provide job fulfillment to the fullest. In fact, Podmoroff (2005) says that combination of these two factors may result into four very influential conditions namely, low hygiene, and motivation and high hygiene and motivation. Werner, and DeSimone add that for these to be effective there is need to enrich the job given to the employee which entails providing both hygiene factors and adding the motivational ones.

Douglas McGregor’s Theory X and Theory Y

According to McGregor’s theory X, a person considers work intrinsically unpleasant and as such can do what he can to avoid the work. Theory Y on the other hand starts the contrary of events; a person looks at work as very favorable and would do anything to stay in the job (Podmoroff, 2005). Ensuring performance would there mean that. This calls for different principles to be applied by the management in order to achieve the desired motivational level. Some of the principles may include decentralizing the control of the organization, delegating some of the duties and especially to those who seem to fear job, make job diverse to accept different kind of people, ensure that the employees participate in the management of the organization and performing appraisals for the employees (Randhawa, 2007).

Motivation of employee through Incentive compensation

According to Gunkel (2006), motivation is the “willingness to exert high levels of effort toward organization goals conditioned by the effort’s ability to satisfy some individual needs”. He believes that however much the idea of motivation is universal where individuals go ahead to maximize their usefulness by ensuring that the issues or objectives they value most are me, it is limited to the challenging design of the study. Some organizations however, will never offer rewards to its workers when they incur higher costs that the revenues or benefits that they derive from business operations (Gunkel, 2006). To him, motivation can either bee intrinsic, coming from within the individual or extrinsic, any thing an individual gets from another person.

Processes theories of motivation by Victor Vroom, Lyman Porter and Edward Lawler, III

This theory assumes that any action of an individual is always goal oriented. This means therefore that when the compensation of an individual is directed towards performance, then the employee is likely to perfume better (Gunkel, 2006). . The theory asserts that even with intrinsic motivational factors, hygiene or any other factors discussed above, there still exists the need for an extrinsic power to motivate further the employee say rewards (Gunkel, 2006). Gunkel (2006) further disagrees with the idea that when incentives are give to promote extrinsic motivation, a crowding out effect will be felt between the two that is , a person’s internal motivational factors will be corrupted and in many cases may not perform well until the extrinsic motivator comes into play. According to him, this holds no water.

Strategic plan for change

From the literature review, Processes theory developed by Victor Vroom, Lyman Porter and Edward Lawler III, it is very evident that whether all the factors of motivation come into play without the reward or compensation aspect, then the motivation becomes useless. It is therefore proper that measures be put in place to ensure that the reward aspect of motivation is there. In this regard, the human resource department has seen it worth that will improve the compensation and benefits of the employees. This will not only see our goof workers remain in the company but also enhance the productivity of the company. Our target is to be a leading company with approximately 75% of the market share in the next five years.

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The compensation and reward scheme that we have developed will also see our company attracting many qualified employees. This will equip the management and the skills of our employees. Better management and qualified skills will ensure that we meet the set objectives within the stipulated period, which is five years. In the recruitment, we shall ensure that we employ the best workers and especially from our competitors. The idea is to know the strengths of our competitors and their weaknesses, developing on them, and devising policies to counter act their strengths. This I believe will make us go a long way in increasing the productivity of this company and make it grow.

Pay system support to the business strategy

With the introduction of new rewards comprising of the compensation and benefit schemes, it is important for us to enlarge the pay system of our organization. Through this pay system, the method of reward distribution will be easier, faster, and more efficient. The enlargement of the pay system will enable us have more employment opportunities which will lead to recruitment of more employees. The efficiency and effectiveness of the system will see into it that employees get the best working environment. This in turn will enable us meet the set objective of employing more employees and retaining them to increase productivity, market share and out wit the competitors. Our recruitment will majorly concentrate on employees from our competitors. The idea is to discover their weaknesses and strengths and outwit them using the SWOT analysis technique by majoring on their weaknesses.

New system and motivation of behavior,

Developed system will also help us attract more employees and retain them. This will be achieved by the fact that the working environment will be very conducive to the employees. The motivational factors employed will not be limited to hygiene, and motivational factors as well as a better and efficient system to help us identify the different levels of satisfaction of each employee and try to satisfy them. Efficiency and effectiveness in service delivery makes work easier thus many employees will opt to stay rather than leave for another job that has no aspect of efficiency in it as well as effectiveness of performance in the production process.

Final recommendations and possible outcomes (best and worst case scenarios)

Finally, based on the data obtained, there is need to make the following recommendations:

We need a strategic approach to help us in implementing the changes that we would like to introduce. To assist us in doing this, I would like to recommend that a team be selected form all the departments who will assist in designing a strategy that we will use to implement the changes. Caution however should be taken, as many employees may be resistance to change.

In formulating the total compensation scheme, as the one we have offered is a sketchy one, we would like the overall management of the organization, that is the president of the company, to help us with resources including human and other required resources; finances.

In addition, a team majorly comprising of the accounts, finance, overall management department and operations management departments should be composed to help in developing the scheme. This is necessary since there will be need to know the revenues and the expenditure as well as get approval from the overall.

The human resource department, on my part will come up with ways of evaluating the employees, recruiting, and doing the performance appraisal in conjunction with training and development of the employees.

We shall develop efficient ways through which some of the employees will be communicated to the final strategy to prevent any rebellion. In the mean time, I recommend that the accounting and finance department to develop policies and procedures of developing our payment system level.

In recruiting, I would like to recommend that we target the employees of our competitors. Through this we shall discover their strengths and weaknesses and take advantage to outwit them in the market.

However, I would like you to note that the above recommendation will be very costly to the organization at the on set but once the strategies are implemented, I assure you the benefits derived will far much exceed the costs experience. In effect, it is a long-term plan, five years plan. In addition, the program will not be introduced once but rather in stages and therefore there is no course for alarm. I further recommend that caution be taken when implementation of the various strategies as they are likely to be met by opposition from some employees.


In as much as employee motivation may be expensive, it is advisable that we should look at the long-term perspective of the study. The study is very broad and not all employees may be satisfied. In this regard, the human resource management department should work on achieving most of the basic forms of motivation. This include ensuring a better working environment, treating each employee equally, appraising performance of the employees, if possible allow the employees contribute to the management of the company and ensure the reward scheme is very favorable. Meeting all these will ensure that at least 85% of the workers are satisfied with the organization.

As a result, many employees will be attracted, the existing ones will be retained as in effect, increased productivity, market share and growth and expansion of the organization. Let organizations take care of the most valuable and delicate asset and this will minimize costs associated with breakdown of machines, ineffective and inefficient work force.

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References section

Gunkel, M. (2006). International Management Studies. Country Compatible Incentive Design: a Comparison of Employee’s Performance Reward Preferences in Germany and the USA. Wiesbaden: DUV.

Javitich, A. (2004). Motivating Employees. Retrieved on November 24, 2010 from

Mathis, R.L., & Jackson, J.H. (2008). Human Resource Management. 12th Ed. Ohio: Thomson Inc.

McNamara, C. Basics about Employee Motivation (Including Steps you can take). Retrieved on November 24, 2010 from

Podmoroff, D. (2005). 365 Ways to Motivate and Reward your Employees Ever Day-With Little or No Money. Florida : Atlantic Publishing Group, Inc.

Randhawa, G. (2007). Human Resource Management. New Delhi: Atlantic Publishers & Distributors

Werner, J. M., & DeSimone, R. L. (2009). Human Resource Development. 5th Ed. Ohio: South Western Cengage Learning.

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