response to 2 students

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Joshua (student1)

Compensation is both the intrinsic and extrinsic rewards employees receive for performing their jobs as part of an organization (Martocchio, 2013). Compensation amounts vary depending on responsibilities, experience, job title, education, etc, and in my opinion, have a direct impact on the success or failure of an organization. In Youndt, Snell Dean and Lepak’s (1996) article they discovered firms who surpass their financial targets for the year tend to be more generous in their compensation. A company’s most valuable asset is their employees. As such, I think companies that provide fair compensation are not only able to recruit better employees but they are able to retain employees longer. First, I think fair compensation reflects a commitment by the employer to their employee, and in turn, the employee feels more valued and committed to aiding the company achieve their mission. Second, I think fair compensation is a reflection of respect for the employees’ time, skills and talents. Providing adequate compensation is a way for the company to say “I respect what you bring to the organization.” This is really important. Lastly, I think firms who provide adequate compensation will have a more engaged and dedicated workforce. In Bhuvanaiah and Raya’s (2014) article, they stated 60 percent of highly engaged employees exceed the expected level of performance. Employees who are paid poorly will perform their job, but I do not think they will perform to the same level as someone who feels adequately compensated. This is because they are not as engaged. Adequate compensation is an important aspect to a firm’s success and these three examples illustrate why employee pay is critical.

Vickers, Trina, (Student2)

My reaction to the statement that compensation has no bearing on a company’s performance would be that this statement is false. Compensation has a direct effect on a company’s performance since it can contribute to its competitive advantage (Gill & Meyer, 2008). While compensation signifies both the intrinsic and extrinsic rewards, which denote a company’s total compensation system, it connects with the company’s competitive business strategy, or strategic utilization of company resources (Martocchio, 2013). Steady, innovative, and unbiased compensation systems are essential to safeguard the achievement of both human resource approaches and the general company competitive approaches. Whereas it is human resources’ role to determine what type of people are significant to fulfill positions that will initiate effective implementation of competitive strategies, compensation professionals must support methods that will permit desirability, suitable job assignment, and progression of these individuals (Martocchio, 2013).

Thus, a company’s compensation system has a direct association on labor costs, which plays a role in a company’s profitability. In order to attract top talent, companies must research what their competitors’ compensation and benefits packages are and offer comparable packages (Looney & Looney, 2005). When companies compensate their employees suitably, it displays a value towards the employees and builds a desire to work, in addition, increase morale and motivation of employees (Looney & Looney, 2005). Therefore, profitability does not only rely on pricing, but the superiority of products and services, which rely on human capital. Consequently, a company with zealous human capital obtains high-quality products, services and, brand value. While pay denotes the majority of companies’ main expense, it is also their most influential performance instrument (Sammer, 2012). Thus, compensation can have a strong bearing on a company’s performance.

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