A company with a number of products, clear vision and unique ideas stands to lure the most competent candidates in each and every level but to maintain this momentum of better performance, it is imperative that the top executive level secures the best talent. A compensation package which is attractive to ensure these talents are maintained at the top management level of the company since they enjoy significant negotiating power and as such additional incentives up and above the compensation package can be impacting in luring an executive to join an organization. Challenging and unique opportunities do sway employees and thus in addition to an appealing compensation package, employee benefits have been applied so as to supplement it. Employee benefits has been very helpful in enhancing economic security of the employees thus curtailing labor turnover, increasing employees loyalty and improving productivity.
Compensation is any kind of remuneration that is received by a person in return for his/her performance of the company's or organizational tasks. There are four common methods of compensation: performance related pay (PRP) such as commission, bonus, time rate and piece rate; fixed basic pay; non-economic benefits such as house, car etc and finally ownership benefits where employees are awarded shares (Reid, 2004). Several factors influence the wage and the salary structure, these include: pressure from trade union, lowest wage rates, existing market rates, supply and demand for a particular job, the employee's qualification and the ability of the organization to pay. Compensation in the form of wages is normally given to a worker while compensation in the form of a salary is normally given to an employee. Executive compensation refers to the way senior executives for the business corporations or firms are paid. Executive compensation comprises of the basic salary, options, shares, bonuses plus additional company benefits (Bagley & Savage, 2006).
Forms of Executive compensation
There are a number of types of executive compensation which offers numerous performance incentives and tax benefits. They include:
Stock options -Refers to the privilege sold by a buyer to a seller that gives the latter a right rather than an obligation either to call(buy) or put(sell) the stock at an agreed price on a particular date or within a specified period (Bagley & Savage, 2006). Stock options ensures the CEOs interests are kept at par with that of shareholders since their value is subject to the price of the stock remaining above the strike price/exercise price (price upon which a stock will be sold or bought upon the exercise of the option) of the option. However stock options are open to abuse through options backdating and excessive risk seeking (Lawrence, 2002).
Restricted stock - These are stocks awarded to an executive but can only be sold once a specific conditions are arrived at and it carries a similar value to the stock's market price during time of the grant.
Deferred compensation -This is normally applied for taxation purposes and involves postponing compensation up to a certain future date. Executive perks compensation includes travel reimbursements, private jet and extra rewards given to the executives. Retirement packages awarded to executives following their retirement from the organization; this is open to abuse as corrupt executives can attach "golden
There has been a significant rise in the executive compensation over the past thirty years exceeding the increasing levels of the average worker's wage. This has drawn the attention of the shareholders, the public and regulation by the government as a response…
Thus the term employee empowerment can be observed as a revolutionizing concept wherein the employees pertaining to different departments and organizational hierarchies gain the right to take decisions in an autonomous manner. The practice is observed to be of a revolutionary character for it goes against the existing practice where decisions are percolated from top to the bottom line.
This research article will highlight the impact of CEO’s compensation and promotion based incentives and their related performance. It is difficult task for assessing the executive compensation and evaluating whether they are working in favor of their investors (Antle, 1986).
The study leads to the conclusion that a good financial reward system is very important for the organization as it helps to improve the performance of the employees. The employees’ motivational aspects and the organization's objectives, as well as goals, can be observed as notably associated with a reward system.
Companies also need to ‘attract, retain and motivate their work forces’ (Noe, 2010, p. 4). To achieve this they must pay their attention to the training and development of their employees. There are several forces that influence the training and development in an organization.
The author states that the need for an effective Total rewards program is underscored by firms being solely dependent upon it for growth, stability and overall success. Likewise, the success of a firm that wants to have an effective sales force must use total rewards program, the size of that firm notwithstanding.
These labor management laws cover the regulation procedures that employees and employers in the U.S are supposed to adhere to. Currently, there are about more than 10 million employers and around 125 million employees in the U.S that are guided by these labor relations and management relations laws (Max, 2013).
Economists and financial experts the world over have assigned several factors for the current economic slowdown in the U.S and other parts of the world. The most common among these are subprime lending, revoking of regulations separating commercial and investment banking, and a more than necessary free hand to the banking sector to decide its risk-worthiness.
The executive compensation program supports McDonald's business strategy dubbed as "The Plan to Win." The corporate strategy of winning focuses on people, product, place, price and promotion which would drive system wide sales and profitability as well as support the company's growth strategy for being better and not just bigger (McDonald's Corporation, 2010).
s important to hire skilled people for an organization, but it is even more important to keep them in the organization and utilize their skills to the best possible extent.
With the advent of information age, talented people will always find better exciting opportunities and