Assess the concept of market competitiveness in relation to an organization's pay system, particularly when it is unable to offer its employees market competitive salaries because of a lack of financial resources. Propose alternative approaches for organizations which have limited financial resources and outline at least three specific steps that could be taken to minimize the impact this could have on the firm's success.
People are willing to work in an organization because of certain factors – working conditions, company stability, work relationships, status, opportunities for growth, compensation, among others. Hence, compensation is one of the reasons why employees are willing to exert their effort, to utilize their time, and to sacrifice other factors that may also provide them satisfaction and happiness in life.
According to Cheerington (1995), total compensation consists of three major components: pay, incentives, and benefits. As such, companies offer attractive base pay, incentives, and benefits in order to attract people to apply and at the same time to retain existing employees. Direct pay includes wages and salaries while incentive may take the form of: merit pay, bonuses, group incentives, gain sharing, and profit sharing. Benefits normally offered include: health care, insurance, pay for time not worked, worker’s compensation, social security, pensions, and employee ...
The solution gives a bit of background on why people chose to work for an organisation and how pay ties into that before making suggestions on how the company's financial system can be addressed in terms of having their employees content with their wages. 594 words with 1 reference.