What is the effect of a total compensation package within a market-competitive pay plan on employee motivation and satisfaction?
Discussion 7-1: Total Compensation Package
Organizations use numerous strategies to motivate and retain employees. Compensation is widely used by many organizations as an employee retention strategy. Therefore, it is imperative for today’s professionals to understand the impacts of compensation on employee motivation and satisfaction (Liu & Liu, 2022). This discussion will explore the effects of a total compensation package within a market-competitive pay plan on employee motivation and satisfaction.
In a market-competitive pay plan, the use of a total compensation package has a positive impact on employee motivation and satisfaction. As Liu and Liu (2022) explain, a company that uses a total compensation package employs the incentive approach as its compensation strategy for rewarding employee performance. The authors further assert that a total compensation package is an effective employee retention strategy. The reason is that the compensation approach increases employee satisfaction and improves their psychological well-being thereby motivating them to perform their roles as required. When employers use a total compensation package to motivate their employees, the workers always feel satisfied with their work and develop a willingness to continue working for their organizations.
A total compensation package helps today’s organization to attract the best talent, retain them, and make them be productive at work. In a study conducted by Auer et al. (2021), the researchers discovered that the use of a total compensation package positively affects employee satisfaction. The increased level of satisfaction is evaluated from compensation reactions, intrinsic motivation, and distributive justice. From this analysis, it is recommended for today’s organization to use a total compensation package to enhance employee motivation and satisfaction.
Auer, E. M., Behrend, T. S., Collmus, A. B., Landers, R. N., & Miles, A. F. (2021). Pay for performance, satisfaction and retention in longitudinal crowdsourced research. PloS One, 16(1), e0245460. https://doi.org/10.1371/journal.pone.0245460
Liu, W., & Liu, Y. (2022). The impact of incentives on job performance, business cycle, and population health in emerging economies. Frontiers in Public Health, 9, 778101. https://doi.org/10.3389/fpubh.2021.778101