Philosophizing Compensation Pay Equity Refers

Philosophizing Compensation

Pay equity refers to equal pay being given for equal value of the work. The skill level, responsibility, working conditions and effort required to accomplish the work determines the value of the job. It is often challenging to establish equitable pay in cases of varying aspects of the job requirements which again is made complex with the disparate skills, knowledge and experience of the employees. The basic objective of most compensation philosophies is to attract, retain and motivate the best employees. However their might be need to make allowances in the compensation practices such as paying higher salaries and better benefits to above market value to specific employees with the objective of retaining a special talent or skill in those particular employees. This might be considered non-equitable approaches. To ensure equity in the compensation practices, compensation philosophies should be established that ensure consistency over time, among departments and with the company growth. This will shield the company from departmental demands for specific compensation practices usually based on the performance or profitability of the department. However customizations of the plan are sometimes necessary so as to meet the objectives of the department for instance a sales motivations (Nwachukwu 1996, 37).

While a uniform compensation practice is always perceived, this is not always achievable and there are disparities in the salaries. Some jobs are valued more than others hence attracting better compensation. There are several reasons for justifying these salary differences. Different employees will be compensated differently depending on the level of education, training, ability, experience and skill. Highly skilled people are paid better salaries especially if they contribute greatly to the organization and without their input the company might not be even in business if not make good profits (Garvey 2005, 76). Salary differences can also be attributed to the existence of shortage of a skill which can lead to temporary inflation above the market rates. This will be necessary so as to attract the talented employees and retain them so that they are not absorbed by the competitors. If the employees skill will be key in advancing the objectives of the company and enable it to meet its targets financially, then the employers will obliged to offer high salary to lure them. The other reason for higher salary is based on the performance of the employees. If the employee generates more revenue, they may be given higher compensation as a reward which will also act as an incentive for future improved performance. This is usually the case for sales department whereby the pay can be based on commission. Basing on the red-circling, higher compensation can be given to the employee i.e. specific reasons such as disability are attributed for the higher salaries. In this case the employee can be performing work which requires low pay since the higher paid work cannot be performed by the employee (Pay Equity Commission).