EXECUTIVE COMPENSATION

Executive Compensation

Executive compensation

Introduction

The compensation (wages, salaries, benefits) is the gratification that employees receive in exchange for their work. The administration of the personnel department to ensure the satisfaction of employees, which turn helps the organization to obtain, maintain and retain a productive workforce. The results of the dissatisfaction can affect the productivity of the organization and produce deterioration in the quality of working environment. In severe cases, the desire for better compensation can decrease performance, increase the level of complaints, or lead employees to seek employment in different companies (Davis and Edge 2004). In addition, low interest function can lead to poorly compensated absenteeism and other forms of passive protest. In this report, we will discuss the concept of executive compensation in a holistic context, and we will bases our discussion on the famous articles on executive compensation from authors like Walsh and Bogle (2008).

Discussion

An inadequate level of compensation also leads to difficulties, feelings of anxiety and Employee mistrust and loss of profitability and competitiveness of the organization. Finding the balance between satisfaction with the compensation obtained and competitiveness the company is the target of the personnel department as to the remuneration of the work. Compensation is not the only way to link performance with overall business strategy. Direct compensation includes wages and salaries, incentives and profit sharing, plus the indirect compensation in the field of employee benefits (Kaplan, 2008).

Objectives of management compensation

The objective of compensation for the executives of the company is to provide them proper returns for the work that they are doing for the company. Below, we have discussed some of the main objectives of executive compensation (Kaplan, 2008).

Acquisition of qualified personnel

Compensation must be high enough to attract applicants.

Retain these CEO's, when the levels of compensation are not competitive, rate of rotation increases.

Control costs. A sound compensation program helps the organization obtain and retain adequate staff to lower costs.

Comply with legal requirements. Improve administrative efficiency. By meeting the other objectives, the department staff reaches its administrative efficiency.

Job evaluations

The job evaluations are systematic procedures for determining the relative value of each position. It takes into account the responsibilities, skills, efforts and working conditions. The aim of the job evaluation is to decide the level of wages. Trained staff performs this evaluation because of the subjective nature of the subject, which receives the name of analyst or specialist positions in compensation. When using a group of managers or specialists, the group called the Committee for valuation of positions (Evans 2006).

The debate of executive pay

For executive compensation means the total remuneration (fixed or variable, in cash or in kind) of senior executives (top executives) of companies, including the bosses. The debate generally focuses on the compensation of some leaders of large companies (Michael, 2004).

Dr. Kaplan, in his article, “Are CEO's overpaid” had implied that the CEO's of the different companies all over the world have played a great role in the development and growth of their companies and thus, a role in the development of ...