A. Briefly explain: There are two types of financial payments made to employees

Question

A. Briefly explain: There are two types of financial payments made to employees which are factored in determining pay rates. What are they and what are they composed of? Explain some of the differences in the types of pay.

B. Briefly explain: How does the Equity Theory of Motivation relate or connect to the total rewards strategy?

C. Briefly explain:  Which Act mostly relates to employees who get paid by the hour and why? What is the employer's responsibility to this law?

D. Summarize: Explain the importance of total rewards. How do total rewards improve employee engagement?

Explanation / Answer

Answer A ) The two types of payments are direct and indirect. Direct payment covers broadly salary, incentives and bonus and indirect payments include employee benefits such as insurance and sponsored vacation. Both the payments are used to determine the pay rate.

Answer B) According to equity theory of motivation, employees are motivated by fairness in the workplace. The employee efforts in terms of hours spent working, commitment towards the organization, experience in the role form the inputs and outputs are in the form of salary, bonus, promotion, recognition etc. An employee perceives fairness of output (total rewards) on the basis of his/her inputs. For example - If employee A in the same role has outperformed employee B in a year, A would expect to get promoted. However, if A is overlooked and B is promoted, A will get demotivated as his effort (input) did not relate to output (rewards).

Answer C) Fair Labor Standards Act relates the most to employees who get paid by the hour. It is important as it safeguards the interests of hourly wage workers. The act establishes the minimum wage for the contracted employees and compensation for overtime work (above 40 hours a week).

An employer is responsible for following the provisions of the act related to wage structure and comply with Youth Employment and Child Labor Laws under this act.

Answer D) Different employees have different motivational drivers/factors. An employee may give importance to increase of pay whereas another employee may want to have increased responsibilities in the organization. A total reward strategy aims to provide monetarily (salary etc.), benefits (insurance), rewards (promotions, sponsored vacation) and developmental (training) reward to employees who meet the standards set by the company. The system encapsulates all the needs of employees.

A total rewards system caters to all set of employees in a diverse workforce with different motivations. Total rewards system gives flexibility to employers to tailor rewards as per perceived benefit in a group of employees. Employees are able to relate better to the reward system leading to improvement of employee engagement. For example - A salesperson would be motivated by the increased commission %age on meeting targets over threshold target.

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