Human Resource (Employees) Is the Most Important Asset of an Organization.

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Question : “Human Resource (employees) is the most important asset of an organization.”

Introduction
Traditionally, human resource focused mainly on administrative functions and process personnel management. However, due to technology advancement, administrative tasks have reduced. The role of human resource has shifted and seems to be taking up more responsibility in company strategic planning and development. This theory has been supported in the work of Noe et al (2010, p.719)

Durai (2010, p.109) stated, “Employees are the precious asset of an organization”. In view of this statement, human resource planning plays an important role to optimize the utilization of its asset in term of cost and productivity. Involvement with company’s strategic planning will allow human resource department to have a broader view of employees’ skill requirement and deployment. Ineffective planning will cause a hindrance to employee satisfactory and organization success.

In this paper, we will study how the theory of compensation management, job rotation, recognition and training will motivate employees. Correspondence to these theories, organization will gain in productivity and profit once the employees are appeased with the working environment.

Employee engagement with the organization
Employees’ talent and efforts have tangible effects on an organization’s productivity and stability. And such efforts are often been neglected and fail to satisfy employees’ needs. When employees’ efforts are not recognized, there will be a lack of commitment to the organization. Thus, employees will not be motivated and will be less creative.

Effectiveness of Compensation Management
In order to facilitate the achievement of an organization’s goals and key values, compensation management plays an important role in human resource management function. Employees should be managed properly and motivated by providing the best compensation system based on the job done and its result. A good compensation system will attract and retain skilled and productive employees. (Pattanayak B, p.284)

According to Armstrong (2002, p.8), the compensation system consists of a total remuneration of direct financial rewards (fixed wage and variable pay) and employee benefits (annual leave and sick leave). And, non-financial rewards such is job recognition, opportunities for career advancement and personal growth are also part of the compensation system. Diagram 2 shows the list of financial and non-financial rewards that an organization can apply under the compensation system. [pic]

Noe et al. (2010, p.547) mentioned that employees’ emotion and function towards the organization is mainly influence by the compensation payout. Difference in individual personal characteristic will draw people to different compensation systems. A great solution to compensate employees in the organization is to adapt combination program rather that one program over another. List of compensation programs are merit pay, incentive pay, profit sharing, ownership, gain sharing, and skill-based pay.

Merit pay is one of the best rewarding compensation programs. Employees are measured and payout annually based on the individuals performance appraisal rated by employees’ supervisor. Many companies in Singapore are adapting this compensation program for their permanent staffs. Employees will be more motivated when their performances are recognized and their basic pay is increased.

Another example of compensation program is incentive pay. Incentive pay is usually seen in organization with sales team that brings in revenue and profit that will gain market share for the company. Employees with higher performance will gain in such compensation program as they measured based on the amount of products or services sold and the payout is not part on the employee’s basic pay. Payment will be earned on a weekly or monthly basis depending on the organization’s policy....
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