Question

There are five basic components of an executive compensation plan: base salary, short-term incentives, long-term incentives, benefits, and perks.

Argue two points of view:

1) Why these executive compensation plans benefit the business and the economy and are good for business?

2) How can these executive compensation plans be negatively perceived and affect employee moral?

Answer 1

1) The compensation plan consisting of these five significant components are considered to attract a large amount of skilled professionals and experts towards the business as these components aim at meeting all possible personal interests of employees who are driven to work for the organization where their economic needs as well as non economic needs are met and thus also motivating them to perform better for achoeving them. Moreover these components have the potential to create high need for achievement among executives for accomplishing higher targets because through offering wide range of incentives and benefits they push themselves to work harder and attain higher goals which will enable them to qualify for such incentives. Thus businesses this way improve their internal srengths and attain the desired results from their executives.

These components also help the ecinomy to prosper and excel. By providing executives with incentives, benefits and perks along with the basic pay helps economy to attract top talents such as skilled experts, technically proficient personnel etc from different countries towards these organization as they see it more alluring then their own organizations and thus create an influx of technical expertise and technical know how in the economy by later imitating these skills possessed by foreign top talents. Moreover they also act as a source to increase the skill building thus making workforce more exposed to foreign work methods and procedures These components encourage the organization and economy to progress.

2) These can be negatively percieved because all such components are extrinsic in value meaning thereby they only provide benefits in monetary terms while executives today look more for intrinsic value meaning there by not providing executives the sense of accomplishment, job satisfaction, recognition, initiative, social accomplishments, power, authority etc which they actually look for in a job. Thus these plans can be percieved negativity and demotivate employee for just working for money.

The another important fact here is that they might make employees feel that the organization is making them work like machines and they are being pushed to work for attaining these benefits which is harming their social life or personal priorities such as they are made to do overtime for getting awareded for bonus or achieve the project much before deadline to receive a Holiday. All these things might rather create stress for employees and decrease their morale instead of increasing because they will feel as if they are not meeting their other responsibilities other than work.

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