Employees' and Employers' Perceptions of the Compensation System


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Compensation is a major motivating factor in any organization as it directly affects the morale of the employee. As a result, it enables them to work more diligently. In any organizations, the employees are considered among the essential assets, and as such, it is important for them to be motivated so that they can aid the organization towards its success. Fairness is critical towards the compensation of employees as it encourages them to work harder to be success of an organization. A debate has been stirred on what individuals consider as fair in an organization, and the argument is based on the employer and the employee perspective (Surienty et al. 406).

These arguments differ as individuals have different opinions on strategies that should be employed in compensating employees in an organization. The company that will be taken into consideration is Lowe’s Home Improvement Inc.

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Equitable Compensation

In my perception, I believe that a company should offer equitable and fair compensation to all its employees. Equity refers to the comparison that employees make in wages that other employees who work in similar categories receive in the organization. Employees believe that equity is important in an organization as most of them is motivated by receiving equal wages. However, fairness refers to the ability of the employer to treat every employee equally in terms of their pay.

The Role of Compensation

Compensation in an organization is very vital for several reasons. Compensation in an organization plays a significant role as it motivates the employees to remain in the organization. Furthermore, proper compensation also allows the organization to attain its objectives and goals more easily as no time is wasted to frequently train employees as most of them remains the work setting (Lo, May-Chiun 420). Lastly, compensation allows Lowe’s Home Improvement Inc to develop an effective cost structure which allows them to compete more efficiently and effectively in the company markets.

The Types of Compensation

Several compensation plans can be employed in the compensation of the employees of an organization. In Lowe’s Home Improvement Inc there are different forms of compensations that are provided to the employees. The different forms of compensation that employees are provided with are salary, bonus, discount, benefits, etc. Lowe’s Home Improvement Inc employees earn hourly based on their ranks. Often, part-time cashier can earn $10-$11 dollars an hour. A for a full-time employee can earn approximately $15.80 dollars dependent on the position. Other benefits are offered to both the full time and the part-time employees of Lowe’s. Some of these benefits that the employees in Lowe’s Home Improvement Inc get include hospital cover and housing benefits.

Most of the employers compensate the employees either through the work that they have done. This is what is known as wages. On the other hand, the employer can come into a contract with the employee where a salary is offered to the employee regardless of the amount that these individuals perform in an organization. In many organizations, the decisions to compensate employees is based on the employer. In Lowe’s Home Improvement Inc, most of the compensation is in monetary form as individuals believe money guarantees fairness and equity.

The Views of Employees of Compensation

Both employers and employees have diverse perceptions of the compensation of employees. Most of the employees believe that their organizations provide them with equitable compensation when they are involved in carrying out similar tasks. Employees believe that any form of compensation is it salary, wages, benefits, bonus, covers should be offered with fairness. In some instances, some employees who have the same education with their colleagues and working in similar job groups are compensated more than the others (Swart and Kinnie 175). This is an unfair act and has been attributed to several reasons.

One of the major causalities that employees perceive as the major factor that causes unfairness in compensation is sexual advances. For example, it is common to find women who have befriended the superiors in organizations earning more than their counterparts who perform similar work. Generally, compensating individuals more than the others on the basis of their sexuality is an injustice.

Another perception that employees have is that individuals working in similar sectors in an organization should receive the same form of compensation. For example, a cashier in Lowe’s Home Improvement Inc may feel that it is right for them to be compensated on a similar wage or more than what other individuals in different organizations are offered (Swart and Kinnie 168). Earning less than what is the common compensation in a market may be a demotivating factor and, in some instances, it may lead to the organization to lose some of its employees to other companies.

Another perception that employees in the organization feel that they should be compensated for their loyalty. Employees that have worked for so long in the organization feel that they should be rewarded so that the employee can be maintained on the basis of their skills. The employee feels that the organization is benefiting since they offer specialized training to the employer. With the skilled labors that these employees offer, the company has enhanced productivity and as such as more profit is obtained.

Last employees feel that at times, they invest most of their times towards the success of an organization. For example, an employee working in Lowe’s may be required to leave late from work as they may be required to take care of arranging the stuff that have been received in the stores. As a result, compensation will be very critical towards motivating the employees (Rimiet al., 538). In this case, the employee can be motivated by providing them with houses that are near to the store or offering them with transport allowance.

The Views of Employers of Compensation

Employers also have a different perspective on the compensation strategy. In many instances, many employers believe that compensating employees should be on the basis of the ranks, and in most cases, individuals who are in high ranks in the job earn more than their counterparts. For instance, in Lowe’s Home Improvement Inc, it is very common that a cashier earns less when compared to their supervisors. Furthermore, most of the employers also have a perception that the employees should earn on the basis of their education level. It is very common for employees working at a similar level to be compensated differently on the basis of their level of education.

Employers also believe that the compensation in the form of bonus to be offered to the employees that are fully employed by an organization. For instance, it is very common that most of the part-time employees do not get similar benefits as full-time employees. For example, bonuses are offered to all the full-time employees, while part-time individuals do not receive the bonus (Sanders and Yang 206). Furthermore, in many organizations, most of the employers compensate part-time employees with less pay as compared to there full-time employees. As a result, the majority of the part-time employees feel that there is an act of injustice towards them.

Lastly, there is a perception that is coming up among the employers where individuals are rewarded on the basis of how hard they work. For example, some employers may only compensate one individual working in a group with other individuals. Although most of the employees find it as an act that is unfair, employers argue that it is a strategy to identify the best employee so that the other employees can be motivated towards working diligently so that they can receive the bonus or the benefits (Sanders and Yang 208).

Measures to Be Taken

Several measures may be taken in place to change the different perception that the employees and the employers have towards compensation system so that the individuals can be on the same page. For instance, the employer can come up with a strategy to compensate all the individuals working as a group rather than compensating only one individual. However, this measure may be altered if the employers feel that a specific employee is working hard towards ensuring that the company succeeds. These employees should be offered with bonuses such as a paid vacation. Lastly, the employer should ensure that they provide a safe environment for the employers to work as these will reduce the extra cost incurred in compensating for any accidents.


Employers and employees have different perceptions when it comes to the compensation system. Most employees feel that they should be compensated on the basis of fairness and equity. However, employers have different compensation plans. For instance, employers feel that rewarding on the basis of merit is a good compensation system. Therefore, it is vital for the employer and the employee to come up with a compensation system that will favor both parties.

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