Compensation and Corporate Success Discussion

There are many methods that organizations use to reward their employees. These rewards
can either be financial or no-financial. Financial rewards include cash payments such as base,
cost-of-living adjustments, and incentives (Milkovich, Newman & Gerhart 13). They also
include indirect rewards such as generous medical insurance and pensions. Non-financial
rewards, also called relational returns, are rewards that are psychological in nature. They include
challenging work, flexible work schedules, learning/career development opportunities, and job
security (Milkovich et al. 15). It has been claimed in some quarters that these relational returns
are better than pay.
Arguments in support of the statement
The best employees are those that are productive and loyal to their organizations. Such
employees are generally those who are happy and satisfied with their jobs. Relational returns
produce the happiest and most satisfied employees because they address their psychological
needs such as the desire to be valued, appreciated, praised, trusted to handle challenging tasks
with independence, and to manage one’s own time. Relational returns provide employees with
all these. For instance, employees get more control over their work schedule thus helping them to
have a better work-life balance. Additionally, employees are provided with challenging tasks to

work on independently thus allowing them to use their talent, skills, and passion to create
something that they can truly call their own. For many employees, these factors significantly
improve their job satisfaction which translates to higher levels of productivity and more loyalty
to their employer.
Secondly, relational returns improve career prospects of employees. For many
employees, especially young ones who have just entered the job market, their path to career peak
involves regular promotion. The shortest path to quick promotions involves training, education,
and skills development. Relational returns provide employees with just that – skills training
which allows employees to quickly make career progress.
Arguments against the statement
Pay-based systems are better than relational returns because employees mainly seek jobs
for financial security. It is through their jobs that employees pay their bills and raise their
standards of living. Thus, employee returns should largely be financial because it is only with
such returns that they can effectively meet their basic and other needs.
Secondly, employees can only receive fair returns for their work if the returns are in a
form that can be compared with what competing organizations provide their employees with for
similar work done. It is not possible to compare relational returns of different organizations. For
instance, one cannot compare factors such as work-life balance and level of challenging work
provided to employees between one organization and another one. It is, however, very easy to
compare total compensation such as salaries/wages and benefits that employees from different
organizations receive. Since comparisons can easily be made, it is easy for employees to
determine whether they are being compensated fairly or not.

Personal view
My personal view is that pay-based systems is better than relational returns. It is fair and
appealing to all employees. Relational returns are hard to compare between organizations. They
can, therefore, be easily abused by organizations. Secondly, relational returns may only appeal to
a section of employees. Older employees, for instance, may not be interested in furthering their
education and improving their skills because they may not need such added education and skills
in retirement. Unlike relational returns, pay-based systems are acceptable to every employee
because almost all employees seek jobs for financial security.

Works Cited

Milkovich George, Jerry Newman & Barry Gerhart. Compensation. McGraw-Hill Higher
Education, 2016.