As Stone (2011) mentioned remuneration refers to what employees gain in exchange for their work which often includes pay as well as benefits. A well designed and appropriate employee remuneration program is an important human resource management activity in assisting the company to gain a world of benefits especially on performance improvement and employee motivation. That is to say the changing of Company XYZ’s remuneration approach to be more appropriate for the current situation of the medium sized web development company will also gain the advantages as the above mentioned which will be explained in the following.
To begin with, changing the remuneration program which may includes both financial and nonfinancial reward system(Cascio 2010) in Company XYZ can make the compensation system work as a more effective tool for the organization to motivate its working individuals especially the programmers and sales people.
At first, as Maslow’s Hierarchy of Needs theory (Daft 2010) proposed that people are motivated by five types of needs including physiological, safety, belongingness, esteem and self-actualization which are as figure 1.0 shows. In Company XYZ, some employees may want higher pay, some may value achievement rather than money, and some may prefer being offered more opportunities for promotion, learning or development. A well changed remuneration program in Company XYZ may become more suitable to fulfill employees’ needs to motivate them to act in its desired way. For instance, the non financial areas in remuneration program such as enhancing the employee involvement in decision making and recognition may largely meet some employees’ esteem needs, which may motivate them to work more harder (Daft 2010; Stone 2011). And the financial approaches such as the salaries and related benefits increasing may also act as a good incentive towards some working individuals in Company XYZ (Daft 2010; Stone 2011).
Figure 1.0 Maslow’s hierarchy of needs
Source: Adapted from Wahba & Bridwell 1974 ‘Maslow reconsidered: A review of research on the need hierarchy theory’
And then, the modified remuneration program in Company XYZ can also improve the sales people and programmers’ job satisfaction since most of the desire in their job can be met under the help of new remuneration program, which means employees will be glad to work for Company XYZ in order to get desired rewards as the exchange of their services. (Martocchio 2009)
Thirdly, the motivation function of changing the remuneration approach in Company XYZ can also be shown in calming its employees’ minds (Milkovich & Newwman 2008). The nonfinancial approaches such as protection programs, supportive, nurturing company culture in remuneration program, for instance, may relieve employees from some kind of fears and work harder without too many worries and at the same time, employees may gain more confidence in their working ability with the help of more suitable remuneration approaches.
Moreover, as Richason (2011) advocated changing the remuneration approach in Company XYZ can also increase the entire working moral of employees. The sales people, for instance, may get more professional and equitable treatment including salaries, benefits and other nonfinancial reward in the new remuneration program, which can improve their working morale since their hard work can gain proper returns.
In terms of performance improvement, changing Company XYZ’s remuneration approach also plays an important role. A well designed remuneration plan can not only help Company XYZ to attract and motivate talents but also nurture a proper organizational culture and key values to modify the behaviors of employees to gain better performance in the following ways. (Martocchio 2009; Milkovich & Newwman 2008)
First of all, it can lower the absenteeism of Company XYZ. The company culture and key values can be well nurtured by the further modified remuneration programs. For example, the modified reward system may have a better treatment on what is right and what is wrong done by sales people, programmers and other employees, such well nurtured essence in the organizational culture and key values can foster a positive working environment in Company XYZ. In other words, if employees can enjoy a nicer working environment as well as be happy with the salaries and benefit, the absenteeism of Company XYZ will be lowered to some extent. And due to such nice working environment and fair rewards, the employees’ turnover rate may also be lowered as well. (Martocchio 2009)
Future more, sales managers in Company XYZ can also depend on the modified remuneration approaches to lead all of the sales person work with the collective target of improving productivity. (Milkovich & Newwman 2008)
And the same time, employees may gain more confidence in their working ability if their efforts can be properly reflected in receiving just rewards. And as a result, the performance level of sales people and programs may shoot up. (Milkovich & Newwman 2008)