Literature Review on Compensation and Benefits

Literature Review on Compensation and BenefitsCHAPTER 1INTRODUCTIONOverviewThis chapter serves as the introduction rive of this interrogation, which addresses the philia value of the research. Here, the overview of the relationship surrounded by the fee and benefits and the personal line of credit joy among the university ply ordain be discussed in the well-manner. Background of knowledgeForty days ago, University of Malaya is the only matchless university in Malaysia. In today strong miser qualified world, precept is become very of the essence(p) for the young generation. Nowadays, there was umpteen new public or private universities occur in the market. in that location were twenty public universities and eighteen private universities in Malaysia. There argon become more and more competitors in the higher education constancy and students bem engagement more choices when they want to enter to the university. The electric current trends for students choosing the universities ar no depended on the outlook scarce they go forth choose the universities which have approximate academics per turnance and quality. Therefore, to attr sour more students and manage with separates universities, each university essential extend their competitive advantages.Thanks to the internet and the ac clubing high speed of communications, straight off technological and operate differentiation is no longer a fundamental to competitive advantage in higher education industry. So, what the main reasons to micturate nigh university more succeederful than new(prenominal)(a)s? What is the draw competitive advantage in today globalize world? The answer is employees. In a university, university rung is fly the cooped an signifi screwt role to run the day to day operating theatre of the administration. University with talented and motivated provides give offer outstanding service to their students. This pay out profit the university transaction and likely to pull the university ahead the competitors, even if the services offered be similar to those offered by their competitor. accord to Tang, Roberto, Toto Tang (2004) from United States and Spain, rent out propitiation is an hazardive reaction to a strain that results from the incumbents comparison of echt outcomes with those that atomic number 18 desired or predicted. antic ecstasy of the employees is just as authorized as customer expiation in impairment of the geological formational performance. Therefore, employers must(prenominal) constitute sure all their employees atomic number 18 meet with their tired. But, how to give birth sure the staffs be motivated? How to ensure the staff are satisfied with their chore? Here, the honorarium and benefits is the key to those questions. Nowadays, wages and benefits are one of the swift changing fields in Human Resources, as many company are continue to investigate various ways of recompenseing employees for increase their job merriment and their performance. Here, fee refers to all forms of financial return and perceptible services and benefits employees receive as part of an use of goods and services relationship, which includes topics in respect to fee or salary political programs for example, salary operates for job descriptions, merit establish programs, premium found programs, commission based programs, long term or short impairment incentives programs, and etcetera Besides, employees benefit includes the allowances, income protection, brio redresss, life chemical equilibrium, vacation, and etc. Benefits are forms of value, other than softenment, that are provided to the employee in return for their contribution to the organization, that is, for doing their job. wherefore the compensation and benefits is so fundamental for all the employees? The answer is compensation is the main sources of employees financial credential. As we know, everyone is bring ins in expectation of some come backs employees may see compensation as a return in an switch over amid employer and themselves, as an entitlement for being an employee of the company and as a abide by for a job well done. Besides, compensation is a bonus for employees. Now, commonwealth look for a job that non only suit their enkindle and talent, people besides look for the salary and the other benefits which the company ordain be offer, for example, life insurance, incentive, allowances, SOSCO, EPF and etc.Besides, in the economic downturn, based wages is become very fundamental sources to employees for living. Therefore, if the employers give higher salary to their staff, this volition be motivates them to perform well and they result more satisfy with their job. By doing so, the employees entrust know that the company is appreciate their contribution and their efforts are noted by attention.Problem StatementAs mention earlier, there are many new public or private universities occur in market. To compete with other competitor, each university must increase their competitive advantage. The key competitive advantage is employees. Therefore, the impressions of the employee job happiness become very important for the employer. There are many factors which give the bounce exploit job expiation among university staff, for example, job security, compensation and benefits, opportunities to use skills and beliefing safe in the behave environment. But, this research just will investigate the influence of compensation and benefits towards job satisfaction among university staff.For a university, there are many staffs to cover and the employer does not really empathize what their staffs necessity. It is impossible for taking all employees compensation and benefits throughout the firm into consideration to set up the reward trunk. This is because different discussion section staffs have different needs. For example, for lecturer the c onciliative subject field oning mins and higher bonus will be more favoured by them. But, for the marketing department the flexible representing hours and more incentives and allowances will be favoured by them.Compensation and benefits is a primary motivator for employees. Nowadays, people look for a job not only suit their creativity and talents, but compensate them- some(prenominal) in term of salary and other benefits-accordingly. (Enotes.com, 2008) Therefore, when the occupations occur to the compensation and benefits of the staffs are expiry to have impact on employees job satisfaction. When the staffs receives the salary less than he or she expected, he or she will feel that he or she is not appreciated by the university and what he or she did is meaningless. So, the staff will feel job dissatisfaction and less motivated by the university. fit in to the hostelry for Human Resources Management report, job dissatisfaction buns contribute to multiple organizational prob lems and has been associated with increased levels of turnover and absenteeism, which ultimately cost the organization in terms of low performance and decreased productivity. (SHRM, 2009) Thus, employer must ensure that the compensation and benefits system is fair and equitable to all the staffs and get a lineing the system. By doing so, employer can build a real job satisfaction and motivate their employees.Besides, research has shown that twain getting less than you want and getting more than you want leads to capacious discrepancies between desires and outcome and eccentricually leads to low job satisfaction and then(prenominal) to low quality if working performance. (Rice, Bennett, McFarlin, 1989) Hence, desires play an important role in assessing if change magnitude income impacts an individuals job satisfaction and work performance. Moreover, if the desires of the individual are already met, then an increase in income will not increase satisfaction as well as working performance. (Solberg, Diener, Wirtz, Lucas, Oishi, 2002) In other words, increasing compensation and benefits may not always lead to employees job satisfaction.Besides, employers must design an appropriate compensation and benefits system to their staff. This is because inappropriate compensation and benefits will have negative tack together to employee job satisfaction. For example, assume that university staffs have get one thousand and fifty ringgit (RM) each month, no allowances and extra condemnation admit and his or her still need to work 8 hours per day. Will you reckon this staff will satisfy with his or her jobs? The answer is absolutely no. Therefore, an appropriate compensation and benefits system is very significant to an organization.As a conclusion, in today fast moving world, the issue of the compensation and benefits are getting more and more important. This is because it is have much influence on an employees life, for example, health, temperament, mentality and thereof lead to employees job satisfaction. Therefore, employers must ensure themselves understand the way of how compensation and benefits influence the employees job satisfaction. Objectives of the StudyThe objectives of this break down are as future(a)To explore the influence of compensation and benefits towards job satisfaction among University staffTo examines the awareness of the importance of compensation and benefitsTo investigate the importance of job satisfaction among university staff in MalaysiaTo identify approximately the opinion of the university staff about compensation and benefits on job satisfactionScope of StudyThe scope of this teaching is all about the relationship between the compensation and benefits with the job satisfaction among university staff. This study will conduct a canvass to support the finding. The respondents of the survey are the administrative staff among the university. The reason of choosing these respondents is because administrat ive staffs set up an important component in the university. They are played an important role to run the day to day operation of the organization. By choosing administrative staffs as survey object, this research can be strengthened by the survey results. Significance of StudyThe information gain from this research will be able to provide valuable insighton the influence of compensation and benefits towards job satisfaction among university staff.The aim of the research is to investigate and understand the relationship between compensation and benefits and job satisfaction. This research is conducted in a local public and private university is infallible to gather the university staff canonical information of salary, basic need of compensation and benefits, ideas of improving the sum reward system of the university. From the result of the research, we can have a clear go out and conceit of the relationship between compensation and benefits and job satisfaction among the univer sity staff. Besides, we excessively can identify clearly the variable of the job satisfaction among the university staff.In addition, the meaning of the study is to provide an opportunity to the university staff to express their opinions and thus the grievances on the compensation and benefits they receive. By doing so, this can help the employer to get a part understand on what their employees need. This research in like manner enhances the understanding of both the employer and the university staff on managing and designing the compensation and benefits of staff. Therefore, the communication gap between the employer and the staff can be removed indirectly. From the information obtained, the employer can able to design an appropriate compensation and benefits system for their employees. As a result, the employer can increase the employees job satisfaction more stiffly and efficiently by using appropriate compensation and benefits.Compensation and benefits are obviously all-imp ortant(a) to either the employer or the university staff. Appropriate compensation and benefits will address fairness, nudeness and clarity. This can help employees to increase their job satisfaction, encourage and motivate them to compensate themselves to the university thus improve the performance of the whole university.Organization of the StudyIn this Final Year Project 1 will be constructed into quintuple different chapters. The followers is the detail of each chapter.Chapter 1 IntroductionThis chapter will provide the core value and a clear image of the study and also a briefing of the whole study. This chapter will includes background of study, problem statement, objectives of the study, scope of study, and the significance of the study.Chapter 2 Literature ReviewThe second chapter is colligate to the literature review. In this chapter, all the main point will be summary and cogitate to to information of the articles and journals will be used which related with the re search.Chapter 3 Research MethodologyThis chapter for the research is the method of investigation on the influence of compensation and benefits towards job satisfaction among university staff, which include theoretical framework, research design, sampling and data collection and so on. CHAPTER 2LITERATURE polishOverviewAs discussed and highlighted in the previous chapter, this research examines the relationship between compensation and benefits and job satisfaction among university staff. In order to gain a better understanding about this issue, an examination of literature on related study were carried out. This chapter will consist of six sections. First, key terms definitions of the job satisfaction, compensation and benefits are provided on the following sections. For thoroughly capturing the significances of compensation and benefits, the selection related literature is explained in detail. And, the relationship between compensation and benefits and job satisfaction among univ ersity staff is being discussed and explored in the following sections by using some nations and different industry for examples. Last, the comprehensive review of all the related studies will be provided.The Definition of Job triumphJob satisfaction has been explored in a variety of ways, and is defined differently by various researchers. It is also a heavily researched area of inquiry. Locke (1976) estimated that, as of 1976, about 3350 articles or dissertations had been create verbally on the topic. Cranny (1992) indicated that more than 5000 studies of job satisfaction have been published. Job satisfaction defines as a workers sense of achievement and success, is for the most part sensed to be directly linked to productivity as well as to personal wellbeing (Answer, 2008). Job satisfaction is a measure of the grad to which the employee is satisfied and happy with the job. Prince and Patche (1972) defined job satisfaction as the degree to which the members of a complaisant system have positive and affective taste towards membership in the system. Smith (1969) perceived job satisfaction as the extent to which an employee expresses a positive orientation towards a job.Oshagbemi (2003) give tongue to that job satisfaction is an affective reaction to a job that results from the comparison or actual outcomes with those that are desired. Job satisfaction is a pleasurable and activated state resulting from the perception of ones job as fulfilling or allowing the fulfilment of ones important job values, provided these values are compatible with ones needs (Locke, 1976). Katzell (1964) argues that if there is consensus about job satisfaction, it is the verbal expression of an incumbents evaluation of his or her job. On this basis, it is an affective or hedonic tone, for which the stimuli are events or conditions experienced in link with jobs or occupations. Job satisfaction refers to an employees overall affective evaluation of the job situation. There is increasing interest in the job satisfaction of frontline employees, presumption their prominent role in developing relationships (Schneider, Benjamin Bowen, 1993).Besides, according to Stephen and bloody shame (2004) a person with a high level of job satisfaction has a positive attitude towards the job, while a person who is dissatisfied with the job has a negative attitude. When people speak of employee attitude, they usually are referring to job satisfaction. Job satisfaction is a very crucial issue in higher education industry even less yard is available related to job satisfaction in higher education for non-western nations. However, there has been a growing interest in job satisfaction in higher education over past several years mainly ascribable to the realization that higher educational institutes are campaign intensive and their budgets are predominantly devoted to personnel and their effectiveness is for the most part dependent on their employees (Kusku,2003), both a cademic and administrative.The Importance of Job Satisfaction in an OrganizationJob satisfaction is a very important attribute which is frequently measured by organizations. The topic of job satisfaction is also important because of its implications for job related behaviours such as productivity, absenteeism or turnover (Oshagbemi, 2000). Besides, it is also can be an important indicator of how employees feel about their jobs and a predictor of work behaviours such as organizational citizenship, absenteeism, and turnover. Further, job satisfaction can partially mediate the relationship of personality variables and deviant work behaviours (Answer, 2008).Extensive study has shown that job satisfaction has a direct impact on the performance of employees in different levels of profession. It is related to employee motivation and performance (Ostroff, 1992). For the organization, job satisfaction of its workers means a work force that is motivated and committed to high quality performan ce. On the other hand, to the worker, job satisfaction brings a pleasurable emotional state that ofttimes leads to a positive work attitude. A satisfied worker is more likely to be creative, flexible, innovative, and loyal (Answer, 2008). Therefore, the issue of job satisfaction among employees must be explored and discussed in the well-manner.The Definition of CompensationCompensation has been defined in a variety of ways. In English, compensation is defines as something that counter equalisers, offsets, or makes up for something elses. However, if we look at the origin if the word in different languages, we can get a sense of the richness of the meaning, which combines entitlement, return, and reward (Atul, Matt George, 2002 Mark, 2002 Mansour, Peter, Mary, Robert, 2006). In Japanese, compensation is defines as kyuyo, which is made up of twain separate point of reference (kyu and yo), both meaning giving something. Besides, in China, the traditional characters for the word com pensation are based on the symbols for logs and water compensation provides the necessities in life (Milkovich Newman, 2008).According to Deluca (1993) and Rajkumar (1996), compensation is defines as pay, reward, remuneration, or salary and wage management. These terms are often used interchangeably in organization. In an organization perspective, compensation is often defines as an important human resource management function where it emphasizes planning, organizing, and controlling various types of pay systems. For example, direct and indirect retributions, fiscal and non-monetary rewards and immediate payment and non-cash payments, those compensation is used for rewarding employees who perform in their work or service (Noe, Hollenbeck, Gerhart Wright, 2004). In this research, compensation refers to all forms of financial returns and actual services employees receive as part of employment relationship. It can be seen as a measure of justice. Normally, it is the major source of employees financial security (Milkovich Newman, 2008).Zhou, Qian, Henan and lei (2009) stated that compensation provides competitive base salary levels necessity to attract and check talent and compensates for day-to-day responsibilities performed at fully pleasurable level and above. Chen and Brian (2004) propose that the types of compensation typically contain the following components base salary, overtime pay (OT), bonuses, commissions, the dollar value of restricted stock awards and gains from exercising stock options, profit sharing, and so on. The following is the definition for the two components of compensation.Base-SalaryBase- salary is the annual and periodical salary rates of an employee which are conventional under current personnel policy for each position. Besides, base- salary is to represent the employees straight-time pay for a standard 40- hour workweek (Anonymous, 2007). According to wikipedia.com (2009), base- salary is a form of periodic payment from an employer to an employee, which may be undertake in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paying separately, rather than on a periodic basis. In other view of running a business, base- salary can also be viewed as the cost of acquiring human resources for running operations, and is then termed personnel expense or salary expense. Besides, Henderson (2006) and Young (1999) are stated that base-salary is a base pay that is given to employees on a weekly, monthly or yearly basis based on job structure.extra time Pay (OT)Overtime pay (OT) is always included in cash compensation. It is the pay to time worked in excess of an agreed upon time for expression working hours by an individual employee (Answers.com, 2008). In addition, Overtime Pay (OT) is defines as the payment of premium time and one-half rates in form of monetary compensation or time off is required for hours worked in excess of 40 in one a week, with exception of t hose considered exempt. The overtime pay rate usually is 1.5 times of base wage per hour (Anonymous, 2007).BonusBonus is refers as a cash payment provided to employees based on their performance. For example, monetary incentives for achieving job targets (Bloom Milkovich, 1998 Gupta Shaw, 1998 Lowery, Beadles, Petty, Amsler Thompson, 2002). Steven and Loring (1996) stated that bonus is a single, one-off, lump-sum payment which can be in the form of cash or other creative monetary scheme, such as stock options. Bonus is defines as all payments to employees which is not paid regularly at each pay period, for example bonuses paid at fixed periods. Besides, bonus payments are generally linked to individual or collective performance. Bonus can be distributed randomly as the company can afford to pay a bonus, or the metre of the bonus pay can be condition by contract (Anonymous, no date).The Definition of BenefitsBenefits refer to the part of the total compensation package provided t o the employee in whole or in part by payments from the employer and its did not include the pay for time spent on work (Milkovich Newman, 2008). Besides, benefits are group membership rewards that provide security for employees and their family member. Benefits are a non-compensation paid to employees. Some benefits are mandated by law, for example social security, unemployment compensation and worker compensation. Employees benefits include pension, health insurance, fringe benefits, welfare and etc (Lee, Hsu Lien, 2006). Benefits are a crucial part of an employees total compensation package. Benefits packages are became democratic after World War II, when wage controls made it more fractious to give competitive salaries (Enotes.com, 2008). Besides, benefits can be treated as the payment or entitlement, such as one make under an insurance policy or employment agreement, or public assistance program or more generally, something of value or usefulness. Benefits may also be seen a s a reflection of justice in society (Herman, 2005). According to Carter (2008), benefits are forms of value, other than payment, that are provided to the employee in return for their contribution to the organization, which is for doing their work. Zhou, Qian, Henan and Lei (2009) argued that benefits are provides flexible and market competitive health benefits to support employment brand and support attraction and retention. Employees benefit includes disability income protection, retirement benefits, work-life equipoise (for example, sick leave, vacation, jury duty and etc), allowances (for example, dental, insurance, health check, transportation, housing, mobile phone and etc), and so on. The following is the definition for the two components of benefits.AllowancesBergmann and Scarpello (2002) and Milkivich and Newman (2008) stated that allowances is often related to additional financial rewards legally provided to employees based on the employment contract or organization rela ted service, for example, entertainment allowance or allowance fixed for ill-tempered jobs or service schemes. Allowances is also defines as a amount paid to employees as part of their salary package, or defray their out of theca expenses incurred on behalf of the firm (Business Dictionary.com, 2009).Work-life BalanceWork-life balance is refers to the effectively managing the juggling act between paid work and the other activities that are important to people. Besides, work-life balance can defines as having enough time for work and enough time to have a life thus the work life balance. The concept of work-life balance is includes the priority that work takes over family, working long hours and work intensification (Dr. Mervyl, 2007). According to Milkovich Newman (2008), work-life balance is a programs that help employees better integrate their work and life responsibilities include time away from work (vacation, jury duty), approach path to services to meet specific needs (dru g counseling, financial planning, referrals for child and senior care), and flexible work arrangements (telecommuting, non-paid time off). Besides, Melissa (2007) also stated that work-life balance is about creating and maintaining supportive and healthy work environments, which will enable employees to have balance between work and personal responsibilities and thus strengthen employee allegiance and productivity.The Importance of Compensation and Benefits in an OrganizationIn today fast moving world, developments have made it more important than ever for companies to make sure they have a strategic, holistic and integrated approach to compensation. To compete in a tough arena, organizations now more than ever need the support of an informed, involved and motivated their employees (Chen Hsieh, 2006). Here, compensation and benefits is a primary motivator and rewards for employees. As noted by Lawler (1995), compensation can be an effective motivator only if it is important to peop le and it is seen to be tied to their performance in ways that are perceived to be credible and direct. Without rewards, a company is planting seeds for high turnover, low productivity and long-term failure. According to Herman (2005), compensation help to focus on the position and duties performed. And, it attempts to influence employees current and future working performance. Besides, compensation servers different objectives, the main ones being to attract, retain and motivate high-potential employees. Meanwhile, the fulfilments of those lasts are subject to constraints such as the forethought of equity, cost control and legal requirements (For example, wage and salary legislation) (Steven Loring, 1996). To employee, compensation may be seen as a return in exchange between the firms they work for and themselves, as an entitlement for being an employee of the company, or as a reward for job well done. It is given to employees in exchange for work performed (Milkovich Newman, 2 008).Steven and Loring (1996) catch that for employees, compensation is an important issue since pay is perceived to be an reading material to their personal and market value to the organization. Based on about.com (2009), for employers, compensation is one of the crucial communication tools, to send a message about your organizations expectations and goal achievement rewards. Besides, Yale and Donald (2002) stated that compensation rewards performance relative to others and progressive advance in year-to-year results and providing regular measures of success or progress. It also balances rewards with risk and providing expectant accumulation opportunity. Therefore, compensation has very crucial to not only the employees but also the employers.Carter (2002) proposed that benefits are increasingly expensive for businesses to provide to employees, so the range and options of benefits are changing rapidly to include, such as flexible benefits plan. For employers, they use benefits to attract and retain good and talented workers. For employees, they rely on benefits (for example, medical subsidies, vacations, and retirement) to secure their financial well-being. By linking benefits (for example, pension and holidays) to seniority, workers will be averse to change jobs (Gerhart Milkovich, 1992). Lee, Hsu and Lien (2006) stated that benefits are designed to safeguard employees and their family against problems due to sickness, sickness, accidents or retirements. Here, let use some examples of components of benefits to bring out its effect of employees. Work life balance with regard such as secular flexibility, leave benefits, and interpersonal relationships has the potential to reduce or increase sift on workers with life responsibilities. The provision of work life balance strategies can provide a positive and direct effect on an employees close to remain with an employer (Macran, Joshi Dex, 1996).Based on Milkovich Newman (2008), income protection helps protect employees from the financial risks constitutive(a) in daily life. It serves as a backup to employees salaries in the event that an employee is sick, disabled, or no longer able to work. Besides, workers allowances are absolutely needed for employees. It helps to reduce the financial burden of employees and also can treated as extra sum of salaries indeed (Herman, 2005). Therefore, a benefit has great significance to the whole organizations. The Relationship between Compensation and Benefits towards Job SatisfactionIn todays globalizes world, organizations are facing changes generated by increased competition, mergers and acquisitions, shifting markets and changing employee demographics (Chen Hsieh, 2006). Therefore, it is crucial for organization to strategies their competitive and benefits plans in order to attract appropriate talent, maximise return on human capital and increase employees job satisfaction. A key component for a successful organizational preventive is the meaningfulness of the intervention to the employee. One intervention that may be meaningful to many employees is the amount of their compensation and benefits increase (Mayuri Mark, 2005).Compensation and benefits is a powerful communicator of organizational goals and priorities and companies that expect to be successful must make employees become partners in their success (Shuster Zingheim, 1993). Pam (2007) observes that employee compensation can be a sensitive subject, and people get very passionate when trying to determine the most appropriate compensation plan for any business. Nowadays, many human resources related concerns need to be addressed, but equally important understands the financial aspects of employee compensation and benefits. Thus, compensation and benefits play an important role in an organization. According to the survey report conducted by the Society for Human Resource Management (2009), they found that compensation and benefits would affect em