Compensation benefits Employees’ retention and motivation are some of the roles of human resource management in organizations and compensation and benefits are important factors. Compensation and benefits also determine production costs and hence marginal returns. Involved potential benefits and cost therefore influence decisions on the human resource management aspects and this paper discusses legal compliance, equity, and transparency as the most important professional and ethical issues in compensation and benefits.
Legal factors are important aspects of an organization’s external environment and dictate decisions on compensation. Legal implications of non-compliance with legal requirements make them a very important issue in compensation. Laws such as minimum wage establish a benchmark for compensation and violation may lead to monetary implications or restrictive measures against an organization. Similarly, remuneration has direct effects on motivation and these establish it as a very important issue in compensation. This is because low wages, below or above a stipulated minimum wage, may lead to low levels of motivation, and have adverse effects on an organization’s productivity and profitability (WorldatWork, 2007).
Equity is another important issue in compensation and has ethical and professional implications. It defines fairness in treatment and involves, in compensation, rewards to employees based on their qualifications and ability. Offering higher compensation to an employee with lower measures on all standards may lead to loss of self-esteem and induce stress on overlooked employees. This may also discourage the overlooked employees and reduce their output (Mathis &. Jackson, 2011).
Another important issue in compensation is transparency in remunerations, especially if remunerations are equitable. Transparency also promotes equity and its potential effect of strengthening employees’ commitment to an organization establishes its significance as an issue, professional and ethical, to compensation (The United States Committee on Financial Services, 2007).
Mathis, R. &. Jackson, J. (2011). Human resource management: Essential perspectives. Mason, OH: Cengage Learning.
The United States Committee on Financial Services. (2007). Empowering shareholders on executive compensation: H.R. 1257, the shareholder vote on executive compensation act hearing. Washington, DC: DIANE Publishing.
WorldatWork. (2007). The worldatwork handbook of compensation, benefits &. tool rewards: A comprehensive guide for HR professional. Hoboken, NJ: John Wiley &. Sons.