Compensation, Benefits and Salary in an Organization

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Today's topic is about how some organizations pay compensation, benefits and salary do not match up with current trends. Based on the article “Analysis: Malaysian workers need more clout to demand for better pay, conditions” written by Bernama. 

https://www.nst.com.my/news/nation/2023/05/905185/analysis-malaysian-workers-need-more-clout-demand-better-pay-conditions 


The rising cost of living has made employees voiced out their pressing concerns. The concern is related to their basic wages and benefits from their workplace, wages in Malaysia had been stagnating prior to the pandemic, but now that inflation is on the rise and wages haven't budged, people's incomes don't go as far. Presently, inflation stands at 3.4%. Basic wages in Malaysia have increased from RM1,200 to RM1,500 but realistically that is not enough to live on due to the inflation and cost of living. A lot of individuals are demanding decent living wages since they feel the latest minimum wage increase to RM1,500 is still too low. The poverty level for a four-member household was set at RM2,208 by the World Bank and the Department of Statistics Malaysia. A common counterargument against raising the minimum wage is that enterprises, particularly smaller ones, would have to cut jobs to cover the extra costs. No matter where it is enacted, the minimum wage remains too low in the eyes of many workers' rights activists. Even while campaigners think the minimum wage should be raised or changed, it's quite improbable that this would happen.


The impact of this issue to employees is job satisfaction decreased. Providing employees with inadequate remuneration and benefits may result in unhappiness, which in turn may have an impact on the overall job satisfaction of those employees. It is possible that this will lead to a higher turnover rate at the company because employees may look elsewhere for better chances. Next, the impact to the performance is in terms of retention and talent acquisition. Organizations that do not provide remuneration that is competitive may have difficulty retaining top talent and attracting experts with the necessary skills. This has the potential to significantly affect the efficiency of the workforce as a whole. The next impact to the organizations is competitive advantages decreased. Organizations that align their compensation with current trends have a greater chance of attracting and retaining top people, which gives them an advantage over their competitors in the market. On the flip side, the talent war can be particularly difficult for those who are falling behind.


The solution regarding this issue is benchmarking against industry standards. When conducting benchmarking, it is necessary to compare the remuneration practices of an organization to the standards of the business industry. It is possible for organizations to alter their remuneration structures to fit with current trends and ensure that they continue to be attractive to top personnel if they detect gaps in their compensation packages. Next, consider non monetary benefits. Pay raises may not be possible due to financial restrictions; in this case, it may be more beneficial to increase non-monetary advantages like health and wellness programs, professional development opportunities, and flexible work hours. Contributing to employee satisfaction without significantly impacting the budget is possible with these. Next, promote performance based compensations. Merit-based pay or performance incentives should be implemented in order to establish a connection between compensation and performance. Motivating workers to do their best and seeing the direct correlation between their efforts and the rewards they receive is the result of this.


Finally, workers and employers alike face serious problems due to the gap between some companies' pay, benefits, and remuneration structures and the norms of the sector. Paying employees and compensating them with a reasonable price must align with their workload which the company gives. Compensation that is out of line with market norms has a negative impact on worker happiness, morale, and productivity. Organizations can create a happy work environment, compete for top talent, and succeed in the long run in the dynamic job market by prioritizing fair and modern pay methods.

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