A compensation philosophy of an organisation is a set of basic principles that drive its decision making process about compensation of labour, which is wage, salary, bonuses etc. The main values within our current compensation philosophy are motivation and performance or employees. Thus, it implies such goals as attracting and retaining the highest performing employees by compensations competitive within the industry; providing internal organisational equity by considering skills, responsibilities and work conditions of each employee; adopting a package of total rewards considered competitive by employees and flexible enough to meet changing business environment; rewarding extraordinary performance in order to ensure motivation for higher results; providing leadership and competitiveness within the organisation by linking career development with performance management, personal skills, experience and rewards.
Major factors of external and internal business environment influence an organisation’s compensation philosophy. Among the factors of external environment are a type of industry and an organisation’s position on the market, the amount of wage and compensation packages of main competitors, the unemployment rate and overall economic situation etc. To internal environment factors that influence an organisation’s compensation philosophy we can relate an organisation’s strategy and tactics, mission and goals, organisational structure and financial resources and others.
A part of our organisational culture is to grow the top managers from the workers inside the organisation and not hiring them from the outside. This ensures that senior managers and chief executives will understand the philosophy and the values of organisation as well as understand the peculiarities of every career position as they themselves pass all of them within the career ladder. Thus, our organisation provides a flexible mechanism to retain our highly performing workers, which implies that the salary grows within the same career position from each year as an entry level employee starts working in the company. This gives him an incentive for personal growth and to stay in the organisation and contribute to its overall success. Furthermore, the company provides each employee a health insurance, fitness & wellness facility and recognition of achievements in order to show that not the labour but an employee himself as a part of team is important. Another measure of personal growth in order to bring up senior managers within the organisation is constant couching, conferences, trainings and seminars aimed at enhancing the performance of each employee.
In order to attract new and retain the best performing employees the company provides a competitive wages and salaries compared to other major companies of the same industry. The wage corresponds to the level of 50th percentile of the regional wage market when the results meet the expectations, and increases to the level of 75th percentile if the results overcome the expectations and, therefore, serves as an additional motivation to stay in the company and achieve better results.
One of the main constitutional parts of our organisational culture is motivation of our employees. Therefore, our salary system provides a certain degree of variable pay as a financial incentive for rewarding individuals for their contribution to company goals depending …
Posted by: Gwendolyn Contos