Employee Involvement of Compensation Decision

There are many pros of having employees involved in compensation decisions. First of all, involving employees in compensation decisions can help employers understand the real requirements of employees and make the compensation system more flexible. Employees can provide the fresh information about working environment, changes of working contents, and their real demand. Employees’ involvement will support company to face the changes. Also, it can help HR people design the compensation system from employees’ view, such as identifying job requirements, setting up standard of performance appraisal, etc. Second, high involvement of employees will motivate employees and change their working attitude. When they get involved in making compensation decisions, they will have a responsibility and feel a sense of belonging. As a kind of incentive, it can help company retain top employees and build up employee morale.

However, employers cannot deny the cons as well. The biggest problem is the cost. If company allows employees to make decisions, it will definitely create high cost and be time consuming. What’s more, how to keep the compensation decision objective is another problem for employers. Employers may lose control when involve too many employees to make the final decision.

When involving employees in compensation decisions at global companies, employers will also face some challenges. First of all, they may face cultural barriers. Different countries have different culture and background; therefore, employees will have different understanding and different focus about compensation systems. What’s more, different areas have different laws and policies. How to avoid lawsuits is another challenge when involving employees in compensation decisions.