Introduction levels of efforts for a given situation.


One of the most critical resources in a firm is human due to the responsibility of making decisions in support of involved tasks and analysis of results for better output. There is need for firms to ensure they manage employees appropriately. One strategy of good employees’ management involves provision of motivational packages such as standardized remunerations that are consistent with the industrial criterions plus philanthropic extra compensations for any additional efforts such as working beyond limits. Lucrative compensation also serves the purpose of attracting and retaining an effective workforce. Compensation management is thus a response to employees’ good deed in form of remuneration, with respect to their contribution to the firm.

The act balances the employees-work in relation through provision of monetary or non-monetary gains.

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Goals of Compensation Departments

1. Describe the three main goals of compensation departments.

The expectancy theory of motivation focuses on the outcomes of a situation as opposed to giving attention to individual or specific needs (Griffin and Moorhead, 2009). The compensation department focuses on relationship between internal needs and the resulting efforts. Their responsibility presents a separation between efforts due to motivation, performance and those due to anticipated outcome such as the remuneration packages. According to the expectancy theory, in order to motivate a person, there is need to link the efforts, performance and motivation of employees. The variables accounting for the theory include, “valence, expectancy and instrumentality” (Griffin and Moorhead, 2009). The other goal of compensation department is to nullify presumptions by giving the management substantiating information over performance in belief that increased efforts forms the foundation for amplified performance. They also have to carry out a performance analysis based on the execution of tasks.

Performance depends on the availability of resources, such as raw materials, time, required skills, availability of performance information and other external support such as the supervisory sustenance. Excellent performance enforces believe of gaining some anticipated outcome value referred to as instrumentality (Griffin and Moorhead, 2009). Clarity regarding understanding of the instrumentality affects outcome, trust accorded to the decision makers regarding outcomes and the transparency of the procedures for deciding the outcome affects.

Contextual Influences

2. Describe the contextual influence that you believe will pose the greatest challenge and the contextual influence that will pose the least challenge to companies’ competitiveness and explain why.

Compensation management is an integral human resource strategy that assists in motivation of employees and improvement of effectiveness in a firm. Valence is a contextual influence that creates the greatest challenge over competitiveness, concerning the importance placed upon expected outcomes.

Some people are motivated by money while others are motivated by the time-offs, thus the differences in valence. People have different abilities and perceptions to change the levels of efforts for a given situation. The capacity mainly depends on the value placed on anticipated results depending on strength of the link between efforts and outcomes. Individual motivation depends on the perception one has regarding efforts, performance and outcome. All the three aspects must work together, for instance increase on efforts increases performance.

Consequently, the performance increases rewards, but if the reward is not valuable to the individual, then the motivation will not exist. People in the same field often compare personal outcomes with those of the colleagues and this alters the efforts of compensation management department to achieve a fair play. Inequality is a contextual influence that creates the least challenge over competitiveness of firms.

The remuneration packages thus differ from one firm to another and this may act as a marketing strategy. It is important that the compensation departments checks on the principal of perception because an employer may provide a work situation that seems to work well among most employees, but it does not mean that everyone is satisfied. The flexibility of strategies enables the company to manipulate undertakings to achieve certain outcomes. Self-interest should not influence compensation management since motivation is an association of efforts and contribution that people make towards expected outcomes (Robbins and Judge, 2006). Equality among firms is not applicable and therefore it is an advantage over performance.

Subjective Performance Vs Objective Ratings


Describe when subjective performance evaluations might be better (or more feasible) than objective ratings.

Lack of motivation at the work place arises because companies lack clarity on best motivational efforts, performance and outcome requirements. Most people are work evaders and do not feel comfortable dealing with problems unless the remuneration is worth the efforts or the reward is valuable to the individual at a personal level. Objective rating would not work well with such members of staff. The company ought to implement subjective performance evaluation and ensure a balance between efforts, performance and outcome as a problem solving procedure instead of democratic procedures in the effort of making the workplace more user-friendly or motivating. Changes in a company occur every now and then and people ought to consider them as opportunities for improving the firm.

Employers should therefore take sides that assist in coming up with solutions for example rules or regulations that overcome future challenges. In line with Hansen (2009), the biggest mistake people make is to have the predisposition of coming up with solutions over a need immediately by negotiating the employees packages. If presented with objective ratings, personnel will often try to manipulate situations in their favour other than avail time for better understanding and achievement of stronger solutions.

Effects of Profit Sharing

4. Describe under what conditions profit sharing plans are not likely to motivate employees.

In a close link to the expectancy theory of motivation, the first step to solving the production scenario is for the company to understand that today; employees need freedom of choice and personal opinions, because they have the sole power over service or goods delivery (Griffin and Moorhead, 2009). The outcome ought to reward by enhancing support to sustainable productive and economic growth.

Sometimes the bonus profit-sharing offers for the employees’ extra efforts towards achieving production goals are not worth the efforts. In such cases, the company must avail alternative strategies in support of the product of labour or productivity, intensity and customer satisfaction. A company need to control the labour productivity. If the profit sharing plans cannot work out, a company can use other major motivation procedures such as team building activities. A company should invest the human capital by letting the total production be equitable to the general remuneration among the employees. This strategy makes employees to overlook the diminutive profit sharing offers. The aim of the compensation management is to improve performance and reach the targeted production levels. Any chosen procedure ought to enhance the morale for development and promote new modes in the workplace operations.

Various non-monetary terms can still boosts knowledge intensity of the workers and production of developments.

Pay-for-knowledge pay concepts

5. Based on your knowledge of pay-for-knowledge pay concepts, describe three jobs for which this basis for pay is inappropriate and explain why

The pay-for-knowledge compensation concept also called the skill-based or knowledge-based plan diverts from the traditional style that bases compensation or wages on the job specifications. Skill-based compensation plan is a modernized style of compensation where employees are able to receive monetary compensation depending on job repertoire, knowledge, skills and experience. As the employee advances, the rate also increases.

Learning different jobs also increases the remuneration package. Good examples of the job where these procedures are inappropriate include the product stores attendants, outsourced labourers such as the computer technicians, and casual labourers. The remuneration of these groups may depend on labour intensity or number of hours worked as opposed the knowledge level. An employee is responsible of individual performance as well as that of their group. Under this criterion, it is easy to know the laxity of a person, the productivity level and thus determine who does not fit on for specific settings.


Griffin, R.W & Moorhead, G. (2009).

Organizational Behaviour: Managing People and Organizations. Kentucky: KY. Cengage Learning Publishers Hansen, J. (2009).

Sales Tips – 5 Rules of Improve For Sales Success. Web. 14 April 2010. Robbins, S.

P & Judge, T.A. (2006). Organizational behaviour. New Jersey: NJ.

Prentice Hall Publishers


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