Tuesday 25 December 2018

Justice and the feasibility of compensation – Factors that affectcompensation system

A compensation system is the sum total of all monetary and non-monetary benefits provided to employees in exchange for their willingness to work. The system of compensation is made and regulate to achieve specific. Those goals include efficiency (efficiency), fairness (equity) and feasibility (compliance) in accordance with the law and legislation in force. The goal of efficiency the specifics include improve productivity and controlling labor costs. Eligibility, as a purpose, related to the implementation of all laws and regulations regarding compensation. If then the statutory laws and regulations change, then its own compensation system need to be adjust as well, so that the purpose of the eligibility may continue to run.

Understanding the compensation Fairness

The fairness is a fundamental system of compensation. Statements like "a fair treatment to all employees" reflects a concern for justice. The purpose of Justice seeks to ensure fairness of compensation to all individuals in the employment relationship. The purpose of Justice focusing on the creation of a compensation system that recognizes the contributions of both the worker (the higher the performance or experience or training, then the higher compensation given) and the needs of workers (providing minimum wage, or health insurance).

Feasibility of compensation is divide into three, namely:

External Justice

deserve wage Rates with salaries that apply to works that are similar in the external labor market. External justice is assess by comparing similar work among organizations that incomparably. Two conditions must be met:

(1) work being compare must be the same or almost the same, and (2). organization that survey should be similar in size, mission, and sector.

Internal Justice

level of salary is appropriate/fitting with internal job value for the company. Internal justice is a function of the relative status of a job in the Organization. The economic value of the results of the work, or the social status of a work, such as power, influence. Its status in the hierarchy of the organization. Internal justice in touch with pluralism salary between different jobs within an organization.

The Justice of the Individual

worker's Individual feels that he was treat fairly compare with co-workers. When a worker receives compensation from the company, the perception of fairness is affect by two factors: (1) the ratio of compensation against the input of effort, education,

training, endurance will be working conditions the detriment of a person; (2) this ratio comparisons with other workers with whom the ratio going direct contact.

Factors that Affect compensation system

The granting of compensation by the Organization to the workers is affect by various factors. These factors are a challenge any organization to determine the wisdom of compensation for workers. These factors, among others, as follows:

The productivity of

any Organization who wishes to gain an advantage. This advantage can be either material or non-material gains. For it was then the organization should consider the productivity improvements in its contribution to profits. From that organization will not pay or compensate exceed contributions to the Organization through their productivity.

The ability to pay for

the granting of compensation would depend on the Organization's ability to pay. Any organization will not pay his workers as compensation, more than his ability. Because otherwise, that organization will roll the mat.

A willingness to pay for

willingness to pay will effect against the wisdom of awarding compensation to workers. Many organizations that are able to provide a high compensation. But not necessarily they want or are willing to provide adequate compensation.

The supply and demand of labor

Many at least labor market work affect the system of granting compensation. For workers that his ability is very much present in the market of work. They will be compensate more than the rare ability of workers who work in the market.

Trade unions

with the workers ' organizations will affect the policy of granting compensation. These workers usually fight for the Organization's members, in order to obtain compensation. If there are organizations which provide compensation, then this will demand workers’ organization.

Various laws and regulations

With the better the system of Government, then the better legislation system also, including in the field of labor (workers). Various regulations and legislation will obviously affect the awarding of the workers’ compensation system by any organizations, both Government and private.

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