Intrinsic Compensation Research Paper Example | Topics and Well Written Essays - 2250 words

Intrinsic Compensation - Research Paper Example It is often expensive for an organization to hire new and skilled employees. Moreover, the frequent recruitment and retrenchment of employees may also have a significant impact on the current employees and on the organizational energy and motivational level. Additionally, by ignoring the issue of compensation, it does not go away or get better with the passage of time but will require valuable time and money to fix the system (Salanova & Kirmanen, 2010). In the highly dynamic business environment, successful organizations are constantly engaged in regular planning and evaluation of their compensation and performance appraisal systems. Thus, compensation system is a critical factor that directly influences the performance of the employees and the organization. Accordingly, an organization should ensure that it has clear and visible compensation system that is being regularly communicated to its employees which further acts as a motivational factor for the organization (Salanova & Kirm anen, 2010). Intrinsic Compensation According to Hamel (2008), â€Å"intrinsic compensations are derived from the workplace itself and are valued internally by the employee. These include opportunities for personal growth, quality of work life, job satisfaction, challenges, personal and professional development opportunities, a sense of belongingness, freedom to act visionary leadership† (Hamel, 2008, pp. 3). In other words, intrinsic compensation can be defined as those activities which have an influence on the intellectual, emotional and physical wellbeing of organizational employees. In the present highly dynamic business environment, intrinsic compensation plays a crucial role in motivating and retaining skilled employees in an organization. Intrinsic compensation deals with the employees critical psychological states of mind that is attributed to employees’ job performance. Intrinsic rewards such as autonomy in decision making, often acts as a motivational factor that seeks enhanced contribution from the existing employees of an organization. The greater employee satisfaction strengthens their engagement in an organization and helps an organization to retain talent within the organization (Allen, 2008). Intrinsic Compensation as a Motivational Factor Intrinsic compensation is derived from the satisfaction that an employee gets from performing their assigned tasks competently. An employee who is engaged in meaningful work tasks based on self defined goals and social norms is often motivated to perform exceptionally well and further develops an inherent interest for the assigned tasks. According to motivational theory of Maslow’s Hierarchy of Needs, employees are highly motivated when their all the needs are effectively satisfied. In relation to this, when employees are satisfied they get the feeling of success from their work which in turn results in high employee motivation to perform their work in a better way (Salanova & Kirmanen, 2 010). Furthermore, healthy work environment is another mode of intrinsic compensation which adds to high motivational level among the workforce.