Compensation Although Archaelogists Do Not

Compensation

Although archaelogists do not know the first time that humans worked for compensation, the first salaried work necessitated an advanced society that had some type of "http: barter system in place that allowed work to be exchanged for goods and services. In addition, the society needed to have organized employers that agreed on how much should be given for how much work. From this, most infer that the first salary would have been paid in a village or city during the Neolithic Revolution, sometime between 10,000 BC and 1,000 BC (Wikipedia).

Naturally, since then, compensation, which includes base pay, wage and salary add-ons, incentive payments, and benefits and services, has continually changed as well as differed depending on such factors as the culture, organization, industry, socio-economic conditions and gender, age, and experience of those working.

The form of compensation can also impact the organization, because it can act as a motivational tool that encourages harder and more productive work or, in a negative sense, encourage people to reduce their efforts out output.

For example, in 2003, TIAA-CREF lost its contract to manage New York State's $1.8 billion college savings plan and had to quickly enhance the company's performance record. CEO Herb Allison decided to develop a new compensation plan that rewarded the best performing employees with bonuses and eliminated the poorest performers. It introduced a five-point rating system for its 6,000 employees. This marked a major change in the organization's culture, because it had never paid bonuses and salary increases based on an individual performance (Marquez, 2006).

Similarly, iIn the past, Payless Shoes' 1,500 associates received bonuses based on the company's earnings. However, in 2005, the firm made 20% of employees' bonuses based on individual performance. Then it began basing employees' merit increases on individual performance as well. In the past, Payless was hesitant to determine salary increases on individual performance, because of the possibility of demoralizing employees. However, the company decided to follow other companies, because it helps retain top performers and provides more a greater degree of accountability in the corporate culture (Marquez, 2006).

As a result, at Payless, the average salary increase for high performers jumped from 9.5% in 2004 to 9.9% in 2005, while the average merit increase only rose 0.2% over the same period. Payless' new program requires its 12 business unit leaders to create a "nine box," with each box detailing an employee profile, how the manager should address the employee's performance and growth potential and what the range of the salary should be. One box may have the name of an employee who is out the door for not performing well enough and another box may have a top performer who is getting a huge increase (Marquez, 2006). Both of these companies say it is too early yet to know if this change in compensation approach will be a positive or negative.