Title: Compensation Strategies and Their Impact on Employee Motivation and Productivity

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Compensation Strategies and Their Impact on Employee Motivation and Productivity Title: Compensation Strategies and Their Impact on Employee Motivation and Productivity XXXXXXXXXXXX Western Governors University Compensation Strategies and Their Impact on Employee Motivation and Productivity In today’s economy, organizations are struggling to find ways to cut costs in order to improve their bottom line. Improvement in an organization’s bottom line can come from slashing services to customers, employee lay offs, eliminating/reducing benefits, and/or reviewing the organization goals to determine what additional areas are not contributing to the financial success of the organization. Compensation packages for employees can be an expensive line item for many organizations. Some studies have shown that compensation packages account for close to 65% of total payroll expenses, which has many organizations seriously questioning the value and necessity of such a huge expense (Schiemann, 1987). Unfortunately, very few organizations recognize that their employees are the critical factor in their success or failure (Javad et al., 2010) and their happiness with the organization and their individual job tasks can make or break them. Today, smart organizations understand that a company’s compensation strategy increases the productivity and motivation of employees, directly impacts an employees desire to achieve organizational goals, and makes the organization more competitive in the marketplace – therefore increasing profits. Productivity and motivation of employees within an organization can be increased or decreased by the strategies the organization utilizes. Both monetary and non-monetary compensation strategies can impact employee motivation and productivity including, direct pay, fringe benefits, job training and development, employee job

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