Management Compensation. Business & Marketing Term Paper (Term Paper Sample)

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Management Compensation
Introduction
Management compensation encompasses all forms of financial returns and other benefits that employees receive in their tenure of employment in return for their enviable contribution to the organization. In the contemporary corporate world, compensation is perceived as a measure of justice; an outcome of productivity. Management compensation is a means of enhancing the balance of work-employee relation by the provision of financial and nonfinancial gains to employees. Compensation is an essential component of human resource management, which aids in motivation of employees, besides enhancing organizational effectiveness.
Types of Management Compensation
Management compensation encompasses both intrinsic and extrinsic components in the form of monetary benefits and non-monetary benefits such as paid holiday. Compensation incorporates salary, as well as other rewards and allowances given to employees in return for their outstanding services. Compensation can be depicted as representing base pay, long-term incentives, bonuses, stock options, and benefits (Davis and Edge 2). The goal based incentive (stock options, bonuses, and long-term incentives) is fashioned at aligning the corporation’s interests (financial success) with those of top managers.
Description
Management compensation is an effective means of enhancing the productivity of the employees and ensuring that deserving employees feel appreciated for their efforts. Some companies utilize management compensation as a tool for fostering a performance-oriented culture where the employees focus on the company’s overall strategic goals. Management compensation is meant to motivate the employees, especially the top management within a company. The motivation of management compensation is to align the employee performance with the business goals, besides enhancing employee satisfaction and retention. Compensation programs also respond to the employee’s psychological and self-actualization needs (Davis and Edge 3).