2. Page 1 of 4
Summary
Introduction
Compensation flowchart
Comment
References
1. Introduction
For this assignment4, students are required to create a flowchart that analyzes and represents
the concepts of Compensation and Motivation.
Compensation and Incentives are considered beneficial to both employers as well as
employees in following ways [1]:
Workers are likely to work at their best when they are offered monetary rewards for
good performance.
Provide opportunity for hard-working & ambitious employees to earn more.
To improve work-flow, work methods & man – machine relationship.
To bring employee involvement to make employee innovative.
Incentives are the sound technique of improving productivity.
Help to improve discipline and industrial relation.
The cost of supervision is reduced.
To obtain desired result.
3. Page 2 of 4
2. Compensation Flowchart
YES
NO
Evaluate jobs
Develop/Revise the
nonfinancial compensation
system
External factors
- Laws and regulation
- Labor market
- Salaries and wages paid by others
- Economy
- Inflation
- Demand and supply of labor
- Union pressure
- Cost of living
Internal factors [2]
- Ability of the organization to pay
- Employee performance, seniority, potential
- Organization strategy
- Position of the company in the business
cycle
- Equity considerations
- Good job analysis and evaluation
- Productivity of workers
Evaluate jobs
Develop/Revise the Financial
compensation package
Implementation of
compensation strategy
Is there any change
in market & laws &
regulation?
-Periodic Market survey
-Laws and regulation review
4. Page 3 of 4
3. Comment
Internal and external Factors affect compensation and incentives in a company. The
compensation package that businesses offer to employees play an important role in the
company’s ability to attract top talent as job candidates, and have their effect on employee
Motivation, satisfaction and retention [3].
According to an author, the compensation package fall into one of the two categories of
motivators: the external motivators category, that is considered extrinsic i.e. they are given to
employee by others, like salary, healthcare, …., While intrinsic or internal motivators or self-
generated are sense of satisfaction and achievement we feel when we spend time on activities
that reflect what drives us, activities that we enjoy [4].
When implemented in such a way, the compensation will attract people to work for the
organization and help to retain people who are already working in the organization. It will
also motivate employees to work at their peak performance and improve morale, providing
better customer service, which can result in organizational growth and development [1].
4. References
[1] Organization & Human Resources Management e-book
[2] Compensation and Incentives flowchart,(L),by Tamer Moustafa
(http://www.slideshare.net/tamermoustafa338/compensation-and-incentives-flowchartlby-
tamer-moustafa) 1/12/2015
[3] mportance of Compensation in the Workplace, by Rose Johnson,
http://smallbusiness.chron.com/importance-compensation-workplace-38470.html
[4] Motivation, http://www.iwise2.com/motivation
[5] Incentive as a part of compensation by Jay Visavadiya, Jigar Chauhan, Rutvij Sharma,
http://fr.slideshare.net/visavadiya/incentive-11967459
[6] Salesperson Compensation and Incentives, 2009 by The McGraw-Hill Companies