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Organization Members
Compensation programs must fit the people who work in the organization. People differ by:
- occupation
- skill level
- education level
- experience level
- level of responsibility
- family situation
- attitudes toward work
These differences affect the compensation employees are willing to accept, their reward preferences, and their views about what they contribute to the organization. They also help to gauge the appropriateness of a compensation program.
Reward preferences
Members of different occupational groups may expect to be treated differently. Income, age and even family differences often result in different reward preferences. Attitude and value differences may encourage or discourage a performance pay plan or the form it takes.
It would be a mistake to implement a bonus program with 10% or more of pay at risk for administrative or operative employees. This places too much of their required income at risk when it is typically needed for rent, food, and other essentials.
Workforce changes
Perhaps even more important to compensation programs are forthcoming changes in workforces. As suggested in the section on the social environment, the workforce is becoming more heterogeneous.
Organizations can expect to employ more aging workers, Millennials, and now Generation Z, the most ethnically diverse generation. generation. This means adapting to greater differences in values, lifestyles, and family situation. In turn, this means greater differences in preferences for and attitudes about compensation.
Discrimination
Workers have become conscious of the right to a fair process of pay, promotion, and dismissal decisions. This means additional attention needs to be placed on the transparency and equity of a compensation program.