Question

What are the pros and cons of having employees involved in compensation decisions? What forms can employee involvement take?

Answer 1

Pros of having employees involved in compensation decisions are as follows-

1. Employees feel empowered

2. Increases enthusiasm

3. Increases loyalty and trust of employees towards organization

4. Employees work hard to improve productivity and competitiveness of an organization

5. High motivation of employees to perform to achieve organizational goals

6. Employees feel more gratification

7. Employees are ready to make sacrifices for transformation of an organization in a better way

8. Employees productivity increases

Cons of having employees involved in compensation decisions are as follows-

1. Employees may develop idealistic expectations from management

2. Employees show inclination to diverge from the established norms of an organization

3. Employees may refuse to follow superiors’ instructions

4. Exhausts large proportion of time

5. Employees may produce troublesome divergences

6. Sometimes employees start producing mediocre results

Employees’ involvement in compensation decisions can be successful only in organizations where employees are more educated and mature. Employee’s involvement in compensation decision creates a high performance environment in most of the cases. Employee involvement practices can take different forms such as job participation, representative participation, downward communication, financial participation, etc.

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