Documente Academic
Documente Profesional
Documente Cultură
By:
Manerly Salvatore
February 15, 2010
COMPENSATION
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to providing monetary value to employees in exchange for work performed” (para. 1).
Compensation may achieve several purposes assisting in recruitment, job performance, and job
management for a variety of purposes to further the existence of the company. Compensation
may be adjusted according the the business needs, goals, and available resources” (para. 3).
McNamara (2003) claimed that compensation is closely related to benefits. Thus, many
people simply referred compensation to a payment to an employee in return for their contribution
to the organization, that is, for doing their job. The most common forms of compensation are
wages, salaries and tips. Furthermore, McNamara explained, “Compensation includes topics in
regard to wage and/or salary programs and structures, for example, salary ranges for job
Meanwhile, employee benefits are typically referred to retirement plans, health life insurance,
life insurance, disability insurance, vacation, employee stock ownership plans, etc. HR Guide to
the Internet stated that benefits is actually included as one different types of compensation, along
with base pay, commissions, overtime pay, bonuses, profit sharing, merit pay, stock options, and
organization. The ranges include the minimum and the maximum amount of money that can be
earned per year in that role. In order to further understand compensation, McNamara stated that
Professional, management and other types of skilled jobs are classified as exempt.
Exempt jobs get a salary, that is, a fixed amount of money per time interval,
usually a fixed amount per month. It is not uncommon for exempt positions to
receive higher compensation and benefits than non-exempt jobs, although non-
exempt jobs often can make more money than exempt jobs simply by working
more hours. Unskilled or entry-level jobs are usually classified as non-exempt.
Non-exempt jobs usually get a wage, or an amount of money per hour. Non-
exempt jobs also get paid over-time, that is, extra pay for hours worked over 40
hours a week or on certain days of the week or on holidays. Each job must have
the same pay range for anyone performing that job, that is, one person can't have a
higher maximum pay than someone else doing that same job. (2003, as cited in in
http://www.managementhelp.org/pay_ben/cmpnstn/cmpnstn.htm, para. 6)
ogranizations. In the hospitality industry, industrial salesforce is a very important aspect of which
represented by sales and marketing professionals representing all segments of the industry.
Researchers such as Shipley and Kiely (1986); Winer and Schiff (1980) agreed that, “Industrial
salespeople say they are motivated by earnings” (as cited in Sipley & Jobber, 1991, p. 157).
Hence, “Compensation can be used to provide incentive, to attract and retain capable salespeople
and to direct them toward achieving specific objective while staying within the company’s
budget (Lancaster & Jobber, 1985; Winer, 1982, as cited in Sipley & Jobber, 1991, p. 158).
However, there are a lot of more employees available now because unemployement is
very high. Berta (2009) reported, “The US’ unemployment reached 9.8 percent in September,
and since the start of recession in December 2007, 15.1 million people have lost their jobs” (p.
30). Thus, many organizations denied the importance of compensation in order to attract and
Irwin (2009) pointed out that “effective organizations and companies are always looking
for the best people, and the best people want benefits” (Berta, 2009, p. 30). Managers need to
remember that compensation may not only be used to recruit and retain qualified employees, but
internal and external equity; reduce turnover and encourage company loyalty; and modify
(through negotiations) practices of unions” (HR Guide to Internet, 2000, para. 9). Furthermore,
Mansbach (2009) emphasized, “When more jobs become available during the rebound, many
companies will risk losing their best talent to competitors that maintained their employee focus”
(as cited in Lockyer, 2009, p.1). Lockyer (2009) agreed that, “Companies may ignored
compensation issues at their own peril, as talent likely will follow the money when the economy
Those companies that reasoned they do not feel the necessity of compensation during
the recession, simply need to start adjusting their compensation strategies and plans by
developing a program outline to meet the companies‘ budget. On his sales performance and
incentive compensation blog, Dionne (2009) admitted, “With the state of the economy, it is no
surprise that most companies are rethinking their reward strategies. In a strong economy, one of
To have a better idea of how various companies are reacting to the economy, Dionne
analyzed the result of some surveys conducted by Hewitt (411 organizations); Watson Wyatt
(248 organizations); Mercer (190 organizations, based on yesterday’s WSJ article); WorldatWork
(members only, 698 members responding to a Quick Poll; BLR (Business & Legal Reports) (518
incentive compensation plans, but are looking at making them work better. (2009,
para. 2)
Meanwhile, Berta (2009) observed the study conducted by HVS Compensation Services,
in conjunction with Nation’s Restaurant News. This study polled representatives from 78
publicly and privately held multiunit chains and measures the compensation and benefits data for
22 leadership positions. Berta later confirmed that, “According to the 2009 Chain Restaurant
Executive Study, restaurant operators are revising plans to lower cost and still find ways to offer
benefits that will reward, retain and attract good employees and top executives” (p.30).
Shipley and Jobber (1991) reported the findings of their salesforce motication,
In addition, a new and comprehensive study of compensation was conducted in September and
October 2009 by HVS-NRN. The survey of this study polled 78 responding companies, 55 of
which are private enterprises and 23 of which are publicly traded firms in chain-restaurant
industry. The study showed that, “There are several strategies companies take regarding
underwater options” and “There were the lack of long-term incentives offered among the
respondents. The median amount of long-term compensation pack- ages, encompassing stock
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options or other incentive grants, only hit six figures in a number of cases, the data show, and for
some positions, such incentives were not even granted” (Lockyer, 2009, p. 29). However,
References
Berta, D. (2009). Restaurant companies find creative ways to compensate talent. Nation's
Restaurant News, 43(43), 30. Retrieved from Hospitality & Tourism Complete
database.
HR Guide to the Internet. (2000). Compensation: Outline & Highlights. HR Guide to the
Internet. Retrieved February 11, 2010 from http://www.hr-guide.com/data/G400.htm
Dionne, J. (2009, January 6). Incentive compensation and total reward strategies during a
recession. LeapComp: Sales Performance and Incentive Compensation
blog, Industry News. Retrieved February 14, 2010 from
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http://leapcomp.com/2009/01/incentive-compensation-and-total-reward-strategies-in-a-
recession.html
Lockyer, S. (2009). Pay attention or pay the price. Nation's Restaurant News, 43(43), 1-29.
Retrieved from Hospitality & Tourism Complete database.
Nelson, B. (2004). Motivating people is the right thing to do. Corporate Meetings &
Incentives, 23(11), 59. Retrieved from Hospitality & Tourism Complete database.
Shipley, D., & Jobber, D. (1991). Salesforce motivation, compensation and evaluation by
Industrial Distributors. Service Industries Journal, 11(2), 154. Retrieved from
Hospitality & Tourism Complete database.