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Compensation and Government Regulations

There are several salary payment systems applied by employers. Job-based pay and skill-
based pay systems are the most common. They are distinctively different in the definition in
terms of how they affect the employee. For job-based pay system, the salary is set depending on
the nature of the work itself, the responsibilities an employer is entrusted, and also the working
conditions and environment (Mericle & Kim, 1999). A skill-based pay system is a compensation
system where workers are awarded additional payment depending on the formal certification of
their expertise. Skill-based pay systems rank higher in terms of effectiveness compared to job-
based pay systems.
The job-based pay system is the most common. However, it has many cons. The highest-
ranking job receives a higher pay while the position at the bottom receives the lowest pay.
Sensibly, a manual laborer performs more duties than a supervisor; hence this system can be
termed as unfair. It also encourages dishonesty when a company is giving job descriptions. A
skill-based pay system encourages the personnel to enhance their competence because a multi-
skilled person is more flexible hence more valuable to the firm. It also motivates workers to
perceive their current job as a stepping stone to a better position because they aim at being better
(Mericle & Kim, 1999). Government regulations are necessary because they ensure fairness in
payment of employees. The minimum wage bill provides a balance of power between the
employer and employee. The Office of Federal Contract Compliance Programs ensures no
discrimination. The laws also ensure that workers are covered when they are injured or in case of
illnesses (Siqueira et al., 2014).
Overall, compensation of workers is backed-up by the government. It ensures the
minimization of discrimination when it comes to paying workers. The choice of the

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compensation system to use is entirely dependent on employers. However, it should be carefully
thought out based on how the firm will benefit.

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References

Mericle, K., & Kim, D. O. (1999). From Job-Based Pay to Skill-Based Pay in Unionized
Establishments: A Three-Plant Comparative Analysis. Relations Industrielles/Industrial
Relations, 54(3), 549-580.
Siqueira, C. E., Gaydos, M., Monforton, C., Slatin, C., Borkowski, L., Dooley, P., … & Keifer,
M. (2014). Effects of social, economic, and labor policies on occupational health
disparities. American journal of industrial medicine, 57(5), 557-572.