What is the effect of a compensation package (benefits, salary, nonfinancial) on employee motivation and satisfaction? Provide example.
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The answer explains the effect of a compensation package on employee motivation and satisfaction. Basically, the compensation package plays a vital role in employee’s motivation as well as job satisfaction. It is the main motivation factor for them to keep on striving for better heights.
A compensation package is a combination of salary and other benefits such as commissions, bonuses, incentives and also nonfinancial benefits like flextime, health insurance, and employee perks that the employers provides to the employees in exchange for employment. Basically, the compensation package plays a vital role in employee’s motivation as well as job satisfaction. It is the main motivation factor for them to keep on striving for better heights. Generally, compensation package has a great effect on employees’ motivation and satisfaction in that, once their safety and psychological needs are fulfilled through monetary measures, their motivation to perform the job increases. Compensating the employees properly and providing them with benefits shows that the organizations values them as workers and as human beings and when they feel valued, they are more motivated to work. In addition, when they know there are bonuses and commissions, they are gradually motivated to provide grader results. This in turn increases the organization’s profitability and productivity because happy employees are productive employees. A good compensation package as well ensures that the employees are satisfied hence boosting their loyalty. This means that they are likely to stay with the company and the managers do not have to spend a lot of money and time hiring new employees. An example of the effect of compensation package on employees and motivation and satisfaction is when the salaries of a sales team in an organization is well defined and commissions are awarded on achieving targets, the workers will be motivated enough to work hard and perform better so that they can continue getting more commissions and incentives.