Effect of Compensation on Employee Empowerment
Employee empowerment is the devolution of authority and responsibility from the senior management of the organizational hierarchy, especially to lower-level employees to make decisions. Expect high performance from the empowered employee. Employee performance is considered a critical consideration in the current dynamic business. Not only to achieve the goals of the organization but the environment around the world Protecting competitive advantages over other businesses. To improve the performance of Employees, all organizations should encourage positive attitudes in the workplace by helping customers with problem-solving, collaborating with employees, trying to avoid unexpected events, and complying with organization quality standards to ensure customer satisfaction. The most effective way to help employees In use their creative skills to enhance their performance in the business in which they work is through empowerment. To improve the encouragement of the employee, fair compensation is considered a vital factor.(Adnan,Zarrar and Zafar,2021)
What is compensation
Compensation is the total cash and non-cash payments an employee makes for the work they do for your business. It's one of the biggest expenses for a business that usually has employees. Compensation is higher than the employee's regular salary. It includes many other types of salaries and benefits. (Kapeel, M.2018)
Types of Compensation
- Base pay
- Commissions
- Overtime wages
- Bonus pay
- Recognition or merit pay
- Benefits
- Stock options
- Other noncash benefits
Employees expect fair compensation for each job activity which is defined to achieve organizational goals from the employer. Compensation has a positive or direct impact on performances. On the other hand, compensation has a two-way relationship with performance. (Adnan,Zarrar and Zafar,2021)
Fig1.1.
(Author developed)
Fig1.1 shows the interrelationship between compensation, loyalty, empowerment, and, performance. Fair compensation increases the loyalty of the employee to the organization. Loyalty is employee loyalty to the extent employees are loyal to the organization, a sense of commitment, inclusion, care, responsibility, and commitment to it. If the employees are paid well comparatively as a fact has high retention which helps to retain the skill within the organization. Good skills always create good individual performances which drive the team performances. (Wulandari et.al.2020)
The compensation received by both employees financially and in-kind as a given salary for employee efforts for the organization. Compensation is also a victory overuse of labor or services provided by the workforce.
As per the research done by Nurlaily Wulandari, Alvin Arifin, Masfufatul Khoiriyah, R. A. Istiqomah Pujiningtiyas, Moh. Arifin in their research also concluded below hypothesizes are correct.
1. Empowerment has a positive relationship with loyalty
2. Compensation has a direct relationship with loyalty
3. Empowerment and compensation have a direct relationship with loyalty
(Wulandari et.al.2020)
Examples of companies that pay the highest compensation companies
1.Google -Median compensation: $134,386
2.Facebook- Median compensation: $149,718
3.Microsoft - Median compensation: $162,818
Benefits of compensation
1. Control the expenses of the organization
2. Accept legal provisions to give the company staff an easy understanding of the pay structure and other benefits.
3. Enhance motivation
4. High Retention
5. high job satisfaction
(Azmi, W.2021)
Conclusion
Compensation and empowerment are the major factors that create a significant influence on the loyalty of the organization. it is important to identify the optimal balancing of empowerment and compensation to give better results. Adhere to labor laws or pay schemes by accepting legal provisions to give the company staff an easy understanding of the pay structure and other benefits. Employee empowerment, employee compensation, and employee accountability all contribute positively and significantly to employee job performance. Employee accountability was found to partially neutralize the relationship between employee empowerment and employee compensation using a moderate regression. To improve employee performance, the organization recommends the formulation and implementation of appropriate compensation strategies which is a balance or optimal organization balance sheet. After reading the research done by different professionals it is proven that fair compensation is truly impacted the loyalty of an employee. Loyalty is one of the key factors that shows the sign of empowerment of an employee, where one can see the self-motivated set of employees. tremendous performance can be seen from a group of self-motivated employees.
(Adnan,Zarrar and Zafar,2021)
References
1. Adnan, M. Zarrar, S and Zafar, K.(2021) 'Employee Empowerment and Compensation as A Consequence on
Employee Job Performance with the Moderating Role of Employee
Accountability', iRASD Journal of Management, 3(3), PP.218-232.doi: org/10.52131/jom.2021.0303.0040
2 MIKE, K., (2018). What Does Compensation Mean?. [Blog] PATRIOT, Available at: <https://www.patriotsoftware.com/blog/payroll/what-is-compensation/> [Accessed 23 April 2022].
3.Wulandari, N., Arifin, A., Khoiriyah, M., Pujiningtiyas, R.I. and Arifin, M., 2021. 'Effect of Empowerment and Compensation on Employee Loyalty'.Health Informatics, Medical, Biological Engineering, and Pharmaceutical (HIMBEP 2020), pp.259-263.,doi:10.5220/0010330902590263
4. Waqar, A., 2021. What is Compensation and Benefits in HRM Objectives, Examples? [online] StartupHR Toolkit. Available at: <https://www.startuphrtoolkit.com/compensation-and-benefits-in-hrm/> [Accessed 21 April 2022].
As expounded by (Demgrcg, 2010) Organizations want to manipulate and enhance the overall performance of their employees. As the energy or ability to produce a favored effect, the efficacy of a worker is more advantageous through empowerment, doubtlessly. Empowerment can be formulated because of the mixture of 4 dimensions. Thus, the equation is derived maintaining in thoughts the component of empowerment improving the position efficacy of character employees
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Demgrcg, M.K., and ERBA, A., 2010. Employee empowerment and its effect on organizational performance. In International Symposium on Sustainable Development (Vol. 2, pp. 142-146).
Adequate empowerment and fair compensation can make a highly engaged satisfied employees. With the time being these satisfied employees can become loyal employees who make investments or do personal sacrifice for the betterment of the business organisation.
ReplyDelete(Upasana, 2015) As you described these compensation can be either financial or non-financial benefit. Companies need employees who are dedicated with integrity and loyalty toward them. Effective compensation convey the message how employees are valuable to them.
Empowerment concept
ReplyDeletehas emerged as a development of the total quality management philosophy in recent years. Common ground has been
established as to the acceptance that empowerment is one of the more difficult factors of continuous improvement,
but should not also be understood as a cure to all contemporary corporate ills. Empowerment yet, has no any metric
to assess its impact on business performance and this condition caused the concept to remain fundamentally
qualitative rather than quantitative.
Employee empowerment is seen individually as a form of employee responsibility in carrying out the tasks given to the leadership to develop the organization. Employee empowerment and compensation are two things that have a big influence on employee job satisfaction. If these two things are carried out in a balanced manner it will create job satisfaction in an organization. Empowerment can be done through giving full confidence to employees at work and providing education and training for employees.
ReplyDelete(Nuris,Wardoyo and Satrio,2020)
A loyal employee is one who is highly committed in developing the organization where he or she works. However, due to some factors that can affect loyalty, some loyal employees can become disloyal and move to other companies that guarantee their future. There are some factors that can affect employee’s loyalty. Some of the presumption factors are compensation, empowerment, and job satisfaction, Compensation is one and main motivation for employee. As Sinamble (2016) states that employee use their knowledge, power, time and commitment not only serving the organization, but also to expecting reward for the work and productivity they have resulted. Erisman and Arini (2016) explain that compensation plays important role in drawing people to work creatively and feel comfortable in the company.
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