Compensation Constraints

Module 6 touches on compensation constraints such as legislative constraints, labour market constraints, product/service constraints, and financial constraints. I found it interesting to read about contingent workers. Long defines contingent workers as “workers who are not employed on a permanent full-time basis”. Since contingent workers are not salaried, they do not receive benefits. You only pay a contingent worker when and if there is work for her to do. This group is responsible for their own taxes as they work for themselves—not the company. Therefore, companies save costs and have tax advantages when hiring a contingent worker. They can also be referred to as temporary employee, seasonal employee, and contract worker. A concern contingent workers have is that they often do not feel valued within the company. It is highly important for organizations to engage workers just as they do their full-time employees to attract the best of contingents, get the best out of them, and preserve a long-term relationship with them There are many reasons for organizations to do this but the most important reason today is that many of today’s temps and contractors are millennials, therefore they seek more attention than older generations (Frauenheim, 2012).

This chapter touches on different individual performance pay. The one that I am most familiar with is sales commission. Long describes a sales commissions system as one “that is geared to the dollar volume of sales or transactions conducted”. There are few advantages of a commission system like Long mentioned such as commission rates are fairly easy to set and measure, can reduce the need for supervision and commissions lead to an increase of sales.

Although there are advantages, many employers have recently started to eliminate sales commission from their pay structure. They believe that having a different pay structure for one group within the company pushed the teams apart, when they really need to be working in collaboration for everyone to succeed. Employers believe that team commitment is essential for the company to be successful and sales commission system is driving the team apart. Few also believe that if someone is paid a commission when they do a great job, it is implied that not doing a great job is acceptable. Instead, more and more companies are implementing group performance pay. Employers still sell themselves to employees by having bonus programs based on whether a project is executed well. For example, profit sharing shows that that the process is one big circle and that everyone has a role and responsibility to play in shared success (Cole, 2017).