Compensation Systems For Executives In Different Cultural Context

3152 words - 13 pages

Saint Petersburg State UniversityGraduate School Of ManagementCompensation systems for executives in different cultural contextStudent:Zvereva SofyaSaint Petersburg2012Table of contents3Compensation system, its functions 31. General concept of system 42. Executive compensation system 7Cultural aspect 71. Japan 82. USA 10Conclusion 11Reference list Compensation system, its functions1. General concept of systemThus, the subject of this work is compensation system. All methods of stimulation used in the organization are part of the reward system. The system includes rewards that the organization can offer to an employee in exchange for his work for the benefit of the organization. With the rewards managers can influence behavior of employees, make them act in some specific way or carry out tasks. However, some authors (e.g. Shapiro and Henderson) divide rewards into compensation and non-compensation. Compensation component is understood as material benefits (wages, etc.), while non-compensation part - the intangible rewards, praise, encouragement, positive effect on self-esteem, etc.Next I would like to elaborate on the material part of remuneration, i.e. on a compensation system of the organization. It is based on three components:Basic part. This includes the basic wage rate, which is determined by each organization depending on its internal characteristics and rules, reigning in the macro environment (industry, country)Variable part. It includes various bonuses, allowances, which provide main stimulation functions.The social package, which is formed on the basis of organizational social policy.First of all compensation system is the main way to have an impact on staff motivation and as a consequence on the performance of their work. In addition, compensation is also intended to achieve several important goals (Shekshnia, 2002):Involving staff in the organization. One of the main principles for employee while choosing between organizations is a comparison of compensation systems in different companies. Considering that nowadays wealth is one of the main resources, which are necessary for ensuring human life, every employee tends to find a place of employment, where compensation policies will meet their needs.Retaining employees in the organization. Remuneration in the organization satisfies the human need for material resources that allow them to reach the desired standard of living. It is safe to say that very often rewards mainly affect the motivation of employees, encouraging them to work in a particular company. If the motivation is no longer supported by any factor (such as, for example, the company's image, which is positively reflected on the image of the employee), the company risks being in a dangerous position. In this case, the company must carefully design compensation policies, which will be competitive enough to retain employees.Stimulation of productive behavior. Incentives are needed to management in influence on employees, in...

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