Feasibility of compensation and justice as well as factors affecting compensation system

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Here's an explanation Feasibility of compensation and justice as well as Factors Affecting Compensation System. Please read below....

Definition of Compensation Eligibility

Compensation system is created and organized to achieve certain goals (Milkovich & Newman, 2004: 7). These objectives include efficiency (efficiency), justice (equity) and feasibility (compliance) in accordance with the laws and regulations in force. Specific efficiency goals include increasing productivity and controlling labor costs. Feasibility, as an objective, related to the implementation of all laws and regulations on compensation. If then the laws and regulations are changed, then the compensation system itself needs to be adjusted as well, so the purpose of eligibility can continue to run.

Understanding Equity Compensation

Justice is a fundamental system of compensation (Milkovich & Newman, 2004: 8). Statements such as "fair treatment for all employees" reflects a concern for justice. The purpose of justice seeks to ensure the fairness of compensation for all individuals in the employment relationship. Objectives focused on making equity compensation systems that recognize the contribution of workers (the higher the performance or experience or training, the higher the compensation provided) and the needs of workers (providing minimum wages, or health insurance).

According Simamora (2004: 449), equity compensation is divided into three, namely:

1. External justice

Appropriate wage rates prevailing wages for similar jobs in the external labor market. Justice of externally assessed by comparing similar jobs between the organizations incomparable. Two conditions must be met:

(1). work is being compared must be equal or nearly equal, and (2). organizations surveyed have similar size, mission, and the sector.

2. Internal Justice

Appropriate level of salary / worth the value of internal work for the company. Internal justice is a function of the relative status of a job in the organization, the economic value of the work, or social status of a job, such as power, influence, and status in the organizational hierarchy. Associated with a plurality of internal justice in wages between different jobs within an organization.

3. Individual justice

Individual worker feels that he is treated fairly in comparison with his colleagues. When a worker receiving compensation from the company, perceptions of fairness are influenced by two factors: (1) the ratio of compensation to the input of effort, education,

training, resistance would harm the working conditions of a person, (2) comparison of this ratio with the ratio of other workers with direct contact occurs.

Factors Affecting Compensation System

According Simamora (2003: 438), the system of compensation by the organization to the workers affected by various factors. These factors are a challenge every organization to determine the compensation policy for employees. Factors these factors include the following:

1. Productivity

Any organization willing to make a profit. This advantage can be either material or non material benefits. For those reasons, the organization should consider the productivity of his work in his contribution to profits organization. Of that organization will not pay or give compensation exceed contributions to the organization through their productivity.

2. Ability to pay

Compensation will depend on the organization's ability to pay. Any organization will not pay workers compensation, beyond his ability. Otherwise, the organization would go out of business.

3. Willingness to pay

Willingness to pay will affect the policy of granting compensation to the workers. Many organizations are capable of providing high compensation, but they are not necessarily willing or unwilling to provide adequate compensation.

4. Supply and labor demand

The extent of labor in the labor market will affect the compensation system. For workers whose abilities are very numerous in the labor market, they will be compensated lower than the rare ability to workers in the labor market.

5. Trade Unions

With the workers' organizations will affect the compensation policy. Workers' organizations usually fight for its members to obtain compensation commensurate. If there are organizations that provide compensation that is not commensurate, then the organization will demand workers.

6. Various regulations and legislation

With a better system of government, then the better the system of legislation, including in the areas of labor (workers). Various rules and regulations will clearly affect the workers' compensation system by any organization, whether public or private.

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