Compensation is an important metric that many employees use to gauge their level of satisfaction within a company and is a form of extrinsic motivation, or that which derives from some external incentive.
Pay Equity
To keep your employees satisfied with their compensation, HR managers
should establish a fair means of deciding on salaries and bonuses.
These monetary motivations can be merit-based, tenure-based, or some
combination of both.
Merit-based Compensation
When determining which employees will receive increases in their
salaries, HR managers must evaluate the overall company contribution that
every employee offers.
If an employee has executed his or her position at the company’s standards,
at the next salary review, this candidate should be offered some standard,
incremental raise.
On the other hand, if an employee is exceeding management’s expectations and
is providing the company even more value than anticipated, this employee
could be advanced to a higher position within their department and receive a
much higher raise.
Tenure-based Compensation
If an employee works in the same position in a company for an extended
amount of time, consistently meets management expectations, and provides
steady value to the company, this employee should receive a standard raise
at every salary review.
No employee should be given increases in their salary solely based on the
fact that they’ve been with the company for a very long time. Employees must
increase their worth to the company, at least incrementally, to justify a
pay increase or bonus.
