Compensation: The Increase in Turnover Rates and De-motivated due to Low Compensation

Name(s): Sukhraj Bhangoo, Nida Aamir, Warda Shafiq, Course: HRM2600 Date: Novemeber 12, 2010

Compensation is a form of pay and rewards received by employees on the basis of their performance. Compensation divides into two parts: direct and indirect compensation. Direct compensation includes employee wages and salaries, incentives, bonuses, and commission. Indirect compensation includes employee recognition programs, rewarding jobs, organizational support, work environment and flexible work hours to accommodate personal needs (Belcourt et.al, 370). “Wal-Mart” is the biggest retail and grocery chain in the world. Currently, …show more content…

However, the bi-parties considered the lower-paid workers who did not have enough resources to pay their own health insurance. Health-care expenses are a sensitive topic in the labour-intensive retail sector where low-paid workers and high employee turnover are a common outcome. Wal-Mart now provides health care to fifty-two percent of its workers, up from forty-six percent, three years ago. The retail industry as a whole provides health coverage to forty-five percent of its workers, according to a 2008 survey of benefits by the Kaiser Family Foundation (http://ehbs.kff.org/images/abstract/7791.pdf, 11/2/10). As a solution to the problem of employees paying for their own health care, Wal-Mart should pay for all of their employees’ health care (especially for the lower-paid employees) as it will not significantly impact their profits.

There are many forms of indirect compensation. One form of indirect compensation is flexible work schedules. Wal-Mart is unable to accommodate its employees’ needs for flexible schedules. A work schedule that is built around an employee’s life can significantly help to increase their motivational levels. The alignment of employee goals and organizational goals together contribute to an organization’s success. Motivation is