Internal Compensation
The most important part of any job is the compensation. Clearly, employees are motivated by the level of pay that a job offers and the number of benefits that are attached the job. Regardless of the industry, successful employers understand the importance of offering competitive compensation packages that attract and retain quality employees.
Internal compensation, sometimes referred to as in-house compensation, is a type of employee reward that comes from within the organization, from a supervisor or peer. It can be offered in the forms of a salary increase, promotion, recognition and awards, extra vacation time, flexible hours, or even acknowledgement for a job well done.
An important factor in internal compensation is whether or not the offer is truly motivating to employees. Weak internal compensation can be less motivating than the external competition, which can result in employees leaving the organization if the external offers are more attractive. It is also important to recognize that external compensation is only part of the total compensation package offered to employees and internal compensation must be considered when looking at the overall picture.
For example, if an organization offers internal promotions, pay increases, and incentives that can result in job growth, career advancement, and internal mobility, these are attractive components of the compensation package which are hard to find elsewhere. Furthermore, employees can more easily remain in their current roles while still being rewarded and recognized. These rewards also attract high performing employees from the external market and can help to build a positive work culture within the organization.
Additionally, it is important to recognize that sometimes employees do not require monetary rewards in order to stay in the organization or for recognition for a job well done. In fact, research has shown that the vast majority of employees would prefer to receive recognition for a job well done, such as praise or acknowledgement, over money. As such, it is important for organizations to be able to recognize this employee need and understand that sometimes higher levels of internal compensation other than a salary increase are necessary in order to motivate employees to stay and succeed.
In conclusion, internal compensation is an important part of any compensation package and it can be a key element in attracting and retaining quality employees. For organizations to be competitive in their market, they must develop creative compensation strategies that differentiate them from external competition and recognize that internal compensation must go beyond the basics of salary and benefits. Offering reward systems, recognition, and promotions that can result in job growth and career advancement can create an attractive compensation package that will draw in and keep high quality, motivated employees.
