Sunday, June 5, 2011

System of remuneration and compensation to the company


The first level - this interaction in the labor market, where price is determined by labor force (in Marxist terminology) or the price of labor services provided by the employee to the employer (in the terminology of economists who do not share the Marxist theory). From the perspective of the economic content of the concept of "labor" and "labor services" are identical: for them is the ability of workers to perform certain types of work (in the form of products or services). The price of labor (labor services) is a monetary reward, which the employer is willing to pay and the employee agree to receive for the use of a period of time available to him these skills in a company or organization to a particular owner (the state joint-stock company, a private person, etc . etc.). Along with the monetary form of legislation in many countries also allows compensation in kind (goods), but the limits of its very narrow and often required by law. The price of labor, employers and employees in today agree or through their representatives through collective bargaining at different levels (most often), or directly, without representatives on the negotiation of individual contracts (in some cases).

The second level of the relations of workers and employers - is the interaction within the enterprise. To the ability of the first were implemented, and their labor to be effective, ie that the employer and the employee received something that each of them counted, the work of the enterprise should be organized in a certain way, but between the price of labor (labor services) and related variables performance of the employee must be installed a certain relationship, which is the subject of the organization wages at the plant.
A key principle of compensation management, and compensation model in a capitalist society - a society of free enterprise - can be formulated as follows: compensation of employees based on their performance must be optimal. Why? Because the company is inefficient operating conditions of free enterprise is losing competitiveness and dies.
Typically, the best results reach those companies which, in its in-house policies have successfully used the relationship between individual performance and rewards, as well as skillfully linked the overall result from the specific contribution of the individual employee.
In practice it is not easy to do. If you are going to reorganize the system of remuneration within the company, highlight some key points on which you rely. First of all, should decide the meaning of the term "result" of an employee.
Under the pay system means is some relationship between the parameters characterizing the measure (norm) of labor and the measure of its payment, within and beyond labor standards, ensures an employee wages, corresponding to the actual results achieved labor (relative to the norm) and agreed between employer and employee cost him workforce.
All of the wage system adopted to subdivide into two groups, the so-called form of wages. If as a key gauge of labor results, use the amount of services rendered, manufactured products, we have the form of piecework wages, and if the number of hours worked - then wait.
Incentive pay - this is part of the labor system, targeting employees to achieve performance, enhance and / or in excess of his responsibilities under the basic norm. Understood in this incentive payment is necessary to consider it as an extra.
Decisive influence on the ratio of the components of wages has a level of organization of production at the plant and has been its quality of work measurement. Practice shows that the lower of these two indicators than the uncertainty range of duties the employee, the lower the share of wage payment and higher - an incentive.
Transforming the system of remuneration, above all, to inspire confidence in the company. The fact is that every innovation is always a certain apprehension, and, if employees do not trust the leadership, then as a rule, they feel that they are going to cheat. This is especially true of the new system of payment. The effect of the introduction of this system can be difficult to forecast, even for those who develop. And if staff do not have faith in management, all subsequent actions will be futile because people will think that all this is aimed at strengthening the operation (and this is indeed the case), and infringement of their rights.
The next thing that is important to achieve by implementing the system of payment by results - that this result could control officer. That it depended on his efforts to reach this result it or not. Figuratively speaking, to weather, earthquake, a decision from senior management, the attitude of colleagues on the possibility of no effect on the results sought by the officer. It is also not an easy task, and probably should only talk about minimizing employee uncontrollable factors.

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