Question

1. Companies focus heavily on cost-saving strategies in order to be competitive.

Identify both monetary and non-monetary ways of cost saving that would be relevant to a person's job.

2. You are a supervisor in a company that pays lower than its competition.

What things do you have control over to increase the likelihood that your employees will feel they are being fairly compensated?

Answer 1

1. Renumeration can take many forms. It may be in the form of a salary or in a non-cash form. Salary, in turn, can be fixed or variable. Choosing the right structure requires an analysis of costs and benefits related to the employee's activity in the company. Monetary incentives relate to financial compensation (e.g. bonus, raise, commission),where nonmonetary incentives are nonfinancial (e.g. praise, recognition, pleasant work environment). As an monetary way of cost saving, an organization should use the Lag Pay-Level Policy, starting employee wages at below market rates. However, even though the policy has a financial attractiveness to the organization but may not be appealing to applicants – the policy coupled with future returns (e.g. stock ownerships) has the ability to enhance morale, teamwork and commitment. As a nonmonetary method of cost saving an organization can focus their efforts less on financial compensation, and more on employee recognition. Compensation is only one of several rewards that influences employee behavior; job rewards that encourage employees to better themselves are equally -if not more- satisfying. For example, workers value empowerment, recognition and opportunities for advancement. These rewards are excellent alternatives to financial compensation as a way for an organization to save money and remain extremely effective.

2. When managing a firm that operates with the Lag Pay-Level Policy (paying below-market rates) a supervisor has several options when creating a positive work environment and experience for their employees. Some examples consist of offering desirable assignments, attractive locations, outstanding colleagues, modern tools and work/life balance. A supervisor is responsible for many things, including maintaining morale of the employees; having the wherewithal to offer effective compensation award alternatives to employees while creating the same results that financial compensation rewards produce is difficult but vital to maintain the organization’s internal alignment.