COMPENSATION AND BENEFITS

Compensation and Benefits

Introduction

Work is a part of life for almost all people around the world. Though the types of work people do and the conditions under which that work is done vary endlessly, people get up each morning and choose to use their human capital in ways that generate some sort of productive good or service or that help prepare them to be productive economic citizens in the future.

Some of this work is done in the privacy of the home, where beds are made, children are raised, and lawns are mowed. Use of labor, like any economic resource, has to be considered carefully in light of productivity and opportunity costs. Though many factors affect this decision-making process, in most cases labor is allocated by market forces that determine wages and employment.

Several characteristics of labor as a resource create complexities. First, the demand for any type of labor services is derived from, or dependent on, the demand for the final product that it is used to produce. This means that highly trained and productive workers are only as important in production in an economy as there is demand for the product they produce.

Second, because labor cannot be separated from the particular persons who deliver the resource, the scope of responses to labor market decisions is broad and affects outcomes in significant ways. The sale of labor services generates the majority of household income around the world. It is income that is used to sustain workers and their families.

This means that labor markets determine, to a large extent, what resources a household has available and thus the quality of life for the members of the household. Decisions become very complex when workers and their families begin considering not only job market choices but also premarket education and training that might be required to prepare individuals for particular occupations.

Literature Review

The study shows that the control and the ownership of the firm play a vital role in determining the compensation plan for the executives of the organization. The study displays that when a firm is externally controlled by the shareholders than the company is more efficient in compensating its CEOs and the top-management rather than the firm which are internally controlled by the administration (Kolb, 2006, pp 177).

One major reason for this cause is that the segregation of compensation plans and the performance of the firm, on the other hand externally controlled companies have learned the art of inclusion of the compensation of the top management and the performance of the firm in terms of the profit (Gupta, Mitra, 2008, pp 58).

Promotion depending upon the compensating the employee is a systematic process. The appraisal process takes a long period of time and do not serve its purpose as the workers use their techniques showing that they are among the skilled workers. On the other hand, the manager can also show unacceptable behavior, sometimes by not providing the incentives that the employee really ...