Importance Of Fair And Equitable Compensation

Fair and equitable compensation is an important concern for all employers. To attract and retain employees, organizations must have an adequate compensation and benefits program in place. Employers go to great lengths in developing a compensation program so employees feel appreciated in the work they are performing. Job analysis and market studies are conducted regularly to compare competitor’s compensation and benefits programs. These studies ensure equivalency in pay by the job being performed, as well as paying skilled employees adequately. The number one reason why employees leave companies is because they think they are underpaid. When employees know without a shadow of doubt that they are being paid fairly, they are more

Employees must believe that all jobs are paid what they are worth. And that the employee must be confident that the company pay rates reflect the overall importance of each person’s job to the success of the organization. Some jobs afford a greater opportunity than others to contribute, those holding such jobs should receive greater pay. A job’s worth is typically assessed through a systematic process known as job evaluation. Job evaluations ratings focus on the requirements of the job rather than on the performance of the individual jobholder. The most common approach is the point-factor method to evaluate on compensable factors that represent the most important determinants of job’s worth. Job descriptions are used to rate each job, one factor at a time until all jobs have been evaluated on all factors. ((Reference for