Employee Compensation Essay Example | Topics and Well Written Essays - 1000 words

Employee Compensation - Essay Example This essay stresses that organizations that are since committed to developing a compensation system that is designed around performance will want to consider the use of incentive pay. Typically given in addition to-rather than in place of-the basic wage, incentive plans should be viewed as an additional dimension to the wage structure. Incentives can be paid based on individual, group, or organization wide performance – a pay-for-performance concept. This paper makes a conclusion that the compensation structure consists of lavishing exorbitant sums on management level while penny-pinching on pay for other workers. This is an example of a harmful business model. The company can, and should narrow its pay gap by bringing down the top – and lifting the bottom up. It has a pay for performance plan for the management level employees. This is strength of the compensation structure but this need to be stretched out to the entire workforce so that the weakness exhibited by way of the huge executive compensation. To conclude, instead of cutting down on the executive compensation package, it would be beneficial if an opportunity is given to enter the profit sharing plan allowing employees to share in the success of a firm by distributing part of the company’s profits back to the workers. In essence, employees become owners of the company. The logic behind profit-sharing plans is that they increase commitment and loyalty to th e organization.