Examples of Remunerations

Remuneration refers to the payments made to an employee for their work or service. Companies use various types of remunerations to motivate their employees to do better in their work.

Theorists often suggest that remuneration may not necessary increase employees’ satisfaction, but it eliminates the conditions that give rise to dissatisfaction.

Some of the remunerations that an organization may consider to pay its employees include:

  • Commission: to be effective, a company should be able to determine the amount of goods sold by each sales person and pay exactly the percentage of those sales as commission depending on the stipulated commission percentage.
  • Executive compensation: includes bonuses and shares. They should be paid to the employees depending on the skills of each employee and the amount of work done and benefits to the company.
  • Salary: Paid periodically depending on the employee’s performance, level of skills and the company’s profitability. The amount paid should not be such that the total salary expenses will amount to a bigger margin than the company’s sales
  • Wage – this is based on the units sold. Wages paid to employees should also be minimized to avoid more expenses but should be fair for the employee’s welfare
  • Employee benefits: compensation offered to employees in addition to normal salary plan. These benefits should be offered to employees regularly so as to motivate them but should not be too much that may increase expenses beyond desirable levels.

Examples of employee attraction and retention mechanisms using remuneration

  • Offering good salary: employees will be attracted by a good salary which can be able to meet their needs
  • Offering bonuses and commissions: if in addition to salary a company gives bonuses to its employees, then the employees will be motivated to stay in the company
  • Potential for salary increment: A company should increase employees’ salaries as their level of skills and performance advance.

Leave a Reply

Your email address will not be published. Required fields are marked *