Employee Compensation Program Effectiveness | Free Essay Example

Employee Compensation Program Effectiveness

Words: 576
Topic: Business & Economics


The dramatic change in the workforce structure in corporations has ushered changes in organizational culture and the human resource system. Increase in nonstandard employees such as temporary, part-time, short-term, independent contractors, freelancers, and contingent workers have enhanced the need for different organizational policy. The literature on nonstandard employment relations is scant and offers little help in defining and structuring an equitable culture within organizations to support two varying kinds of employees. This memo will help identify certain areas to establish a sense of equity, influence contingent employees have on the business, shed light on contingent employment compensation, and creating a sense of employment.

Creating a Sense of Equity

Contingent workers are hired by employees on a conditional and transitory basis, initiated by the need for labor for a particular job (Polivka, Cohany, & Hipple, 2000). The compensation difference between full-time and contingent workers is apparent and becomes a major reason for inequity (Hipple & Stewart, 1996). Contingent workers earn less than full-time employees, which is due to the differences in the nature of work and skills of full-time and contingent workers (Hipple & Stewart, 1996). Further, contingent workers may have a sense of insecurity due to the unpredictable nature of their work (Kalleberg, 2000). Further, research has also demonstrated that contingent workers are less likely to engage in organizational citizenship behavior (Kalleberg, 2000). These differences in the psychological thinking of the contingent workers may create inequity in the culture of the organization.

Impact of Contingent Employees

Contingent workers, as defined by Polivka et al. (2000) demonstrate that they are hired when there is a demand for extra help. Therefore, they are human resource inventory, utilized on a real-time basis as and when a job arises. Therefore, they reduce the cost of keeping permanent labor. Further, HRM responsibilities are reduced, as they are not part of the full-payroll of the company; hence, they are disassociated from pension or health schemes offered to full-time employees. Thus, the overall cost of keeping a full-time workforce that has only seasonal work would increase the cost of labor. However, hiring contingent labor when there is work reduces the cost of paying wages throughout the year. The employment relations become complicated when there are both contingent and full-time employees, as the organizational culture cannot be defined for contingent workers who are almost like hired short-term help and are not affected by the culture of the organization.

The opinion of Contingent Compensation

The nature of the job done by the contingent workers is different from that of full-time employees. The full-time employees are hired based on the skill-sets that they have. However, contingent workers are hired to do a particular job that arises for a particular period. For instance, on a farm, the overseer is hired as a full-time employee who administers all the work to be done on the farm throughout the year. However, during the harvesting season, contingent workers are hired to pick the fruit. Therefore, the nature of the job done by the full-time employee and the contingent worker is different. Therefore, wages for full-time and contingent workers should be different.

Creating a Sense of Engagement

As the CEO of a company that historically hired full-time employment, I would introduce the contingent workers to the work culture of the organization and show them how the company works. Infusing the values and ethos of the company will help the contingent workers to understand the culture better and will increase engagement.


Hipple, S., & Stewart, J. (1996). Earnings and benefits of contingent and noncontingent workers. Monthly Labor Review , 119, 22-30.

Kalleberg, A. L. (2000). Nonstandard employment relations: Part-time, temporary and contract work. Annual review of sociology , 26, 341-365.

Polivka, A. E., Cohany, S. R., & Hipple, V. (2000). Definition, composition, and economic consequences of the nonstandard workforce. In F. J. Carré, M. A. Ferber, L. Golden, & S. A. Herzenberg (Eds.), Nonstandard work: The nature and challenges of changing employment arrangements (pp. 41-94). Champaign, IL: Cornell University Press.