Fair and Equitable Compensation Term Paper

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Equitable Compensation

The objective of this study is to examine fair and equitable compensation and to utilize critical thinking in discussing issues from two perspectives and those being the perspectives of both employee and employer. The writer's own concepts will be critically examined concerning compensation and benefits issues.

Defining Fair and Equitable

In order to examine the issue of fair and equitable compensation it is necessary that the words 'fair' and 'equitable' be defined. The word 'fair' is defined by the Merriam-Webster Dictionary as "agreeing with what is thought to be right or acceptable" and "pleasing to the eye or mind especially because of fresh, charming, or flawless quality." (2013, p.1) The word 'equitable' is defined by the Merriam-Webster Dictionary as "dealing fairly and equally with all concerned." (2013, p.1) Therefore, fair and equitable compensation means that the compensation offered by the employer to the employee is fair and equal to the work being performed by the employee for the employer in comparison to work performed by other employees for the employer.

II. Understanding Fair and Equitable Compensation Calculation

The work of Romanoff, Boehm, and Benson (nd) report that a central theme in compensation theory and practice is that of equity and it is important that equity is applicable in various contexts including; (1) legal and economic issues of equal pay for similar work; (2) differences in pay due to external competition or market pressures; (3) individual wage fairness for the same job being performed by more than one individual; (4) the view of the individual employee as to their value when compared to their pay. (p.1) It is reported that the approach that the company uses to equity "is as important as the actual pay programs it implements.

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" (Romanoff, Boehm, and Benson, nd, p. 1) Romanoff, Boehm, and Benson report that the company's focus on equity external to the company is the general method of designing compensation structures and programs geared toward competitiveness with the labor markets and is such that enables the company to remain competitive with other companies. The perceptions of employees of company equity in compensation are important in the company's ability to "attract, retain and motivate its employees." (Romanoff, Boehm, and Benson, nd, p.1) Employees however, perceive equity in various ways therefore equitable compensation is such that "poses a conceptual and practical challenge" or the dilemma of how the ability of the company to pay and willingness and need to pay can be reconciled with the perception of equity held by employees. Equity is relevant in cases where employees "perform similar jobs" and when they perform dissimilar jobs and work within the same department or in different departments." (Romanoff, Boehm, and Benson, nd, p. 2-3) Equity is reported to be expressed externally when employees work in the same or different industries, in the same union or profession….....

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