Group #2: Analysis of Issue
Seniority (years of service) should not be the basis of employee compensation. Employees should be promoted and given raises solely on the basis of their work performance and merit. That is a better way to encourage high productivity.
Discuss the extent to which you agree or disagree with the opinion stated above. Support your views with reasons and/or examples from your own experience, observations or reading.
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The issue of compensating employees based on their work experience or merit rather than seniority is a controversial issue. On the one hand, financial incentives are effective tools to motivate employees to perform better at their work and improve their performances. On the other hand, senior people come with a lot of experience and it would make sense that experiences should be rewarded more so that the company can retain him for longer duration of time and benefit in the long run. However, on reviewing the reasons closely, it is very clear that the merit and performance should be the sole reasons for raises given to employees.
Firstly, If senior employees are given more compensation based on their experiences rather than the merit of their work, it will affect the morale of the other employees in the company and will lower the productivity. A senior employee brings with him lots of valuable experiences and this should be appropriately compensated but for the employee to continuously contribute to the group's success, his/her future compensation should be driven by his or her’s work performance. For example, the CEO of a company comes in with a high salary and perks but his future pay raise is dependent on how much he increases his revenue and/or profit. This drives him to make good decisions and motivate his employees to work harder and thus driving higher productivity.
Secondly, when employees gain more experiences, sometimes their performance levels become stagnant. This could be because the employee feels bored about his line of work or he is comfortable with his pay and the pay raise he is getting and doesn’t want to work harder anymore. In either cases, the employee is contributing less to the bottom line of the company and thus reducing the productivity. Would you rather reduce the pay raises for this employee and make his future compensation depend on his performances or continue to indulge him with good raises because he has more years of experience? Take for example, the sport of cricket– Normally the senior players are paid more than the younger players. As long as the performances of the senior players meet the board approval and they continue to motivate the young players to improve, their compensation continues to improve. If a senior player is not performing well for a season or 2, he might be removed from the scene to allow y!
ounger players to take the stage. This helps in keeping the seniors on their toes and not slack.
Although financial compensation is good to motivate the employees to work harder, it also has some drawbacks. The CEO of a firm might cook his books to show better numbers just to make his year end hefty bonus. However these issues can be tackled by better regulations and corporate governance .
Finally, new employees are usually the most energetic and motivated in a company and they normally contribute to the increase in productivity by working harder and longer. If the companies are to benefit from these employees, it will need to provide more performance based compensation to keep them motivated for a longer duration. Would you rather tell the employee that he or she will earn 20% bonus next year if they complete this project on time than have a fixed scale of compensation for every year of their service?
In conclusion, whether it is silicon valley companies or sports, the productivity increases when compensation is solely tied to the employee's performance and merit rather than the seniority.
Seniority (years of service) should not be the basis of employee compensation. Employees should be promoted and given raises solely on the basis of their work performance and merit. That is a better way to encourage high productivity.
Discuss the extent to which you agree or disagree with the opinion stated above. Support your views with reasons and/or examples from your own experience, observations or reading.
-----------------------------------
The issue of compensating employees based on their work experience or merit rather than seniority is a controversial issue. On the one hand, financial incentives are effective tools to motivate employees to perform better at their work and improve their performances. On the other hand, senior people come with a lot of experience and it would make sense that experiences should be rewarded more so that the company can retain him for longer duration of time and benefit in the long run. However, on reviewing the reasons closely, it is very clear that the merit and performance should be the sole reasons for raises given to employees.
Firstly, If senior employees are given more compensation based on their experiences rather than the merit of their work, it will affect the morale of the other employees in the company and will lower the productivity. A senior employee brings with him lots of valuable experiences and this should be appropriately compensated but for the employee to continuously contribute to the group's success, his/her future compensation should be driven by his or her’s work performance. For example, the CEO of a company comes in with a high salary and perks but his future pay raise is dependent on how much he increases his revenue and/or profit. This drives him to make good decisions and motivate his employees to work harder and thus driving higher productivity.
Secondly, when employees gain more experiences, sometimes their performance levels become stagnant. This could be because the employee feels bored about his line of work or he is comfortable with his pay and the pay raise he is getting and doesn’t want to work harder anymore. In either cases, the employee is contributing less to the bottom line of the company and thus reducing the productivity. Would you rather reduce the pay raises for this employee and make his future compensation depend on his performances or continue to indulge him with good raises because he has more years of experience? Take for example, the sport of cricket– Normally the senior players are paid more than the younger players. As long as the performances of the senior players meet the board approval and they continue to motivate the young players to improve, their compensation continues to improve. If a senior player is not performing well for a season or 2, he might be removed from the scene to allow y!
ounger players to take the stage. This helps in keeping the seniors on their toes and not slack.
Although financial compensation is good to motivate the employees to work harder, it also has some drawbacks. The CEO of a firm might cook his books to show better numbers just to make his year end hefty bonus. However these issues can be tackled by better regulations and corporate governance .
Finally, new employees are usually the most energetic and motivated in a company and they normally contribute to the increase in productivity by working harder and longer. If the companies are to benefit from these employees, it will need to provide more performance based compensation to keep them motivated for a longer duration. Would you rather tell the employee that he or she will earn 20% bonus next year if they complete this project on time than have a fixed scale of compensation for every year of their service?
In conclusion, whether it is silicon valley companies or sports, the productivity increases when compensation is solely tied to the employee's performance and merit rather than the seniority.
