Compare and Contrast an Entitlement Compensation Philosophy and a Performance Focused Compensation Philosophy
This calls for the human resource departments in healthcare sector recruit competent professionals to earn a competitive advantage. The human resource strategist has to find a balance between the company priorities and competing factors and come up with a compensation system that satisfies the goals and objectives of the employees and organizations.
Entitlement compensation philosophy is common in organizations that have increasing compensation schemes each year. It helps in organizing pay rates. This compensation increases based on time one has spent with the company.
Generally, according to entitlement philosophy, all employees including executives who subscribe to it ought to receive pay increase on base pay for spending more than a year working for the company. In addition, benefit programs and incentives should continue growing regardless of the changing economic conditions or industry (Flynn, Mathis, & Jackson, 2016).
Both entitlement compensation philosophy and performance focused compensation philosophy use direct compensation. The variable pay is given out in the form of stock options, incentives, and bonuses (Reed &Bogardus, 2015).
In both compensation philosophies, the base pay and incentives vary depending on the task, physical effort, skills and knowledge and working conditions of the job. They both also consider external equity. External equity examines rates that other organizations are paying in a compensation program for a position that is competing in an organization.
According to (Hernandez & O’Connor, 2010), healthcare employers that fail to provide compensation that is viewed as equitable in comparison to other organizations by the employees are more prone to a higher turnover. They will also find it challenging to recruit high demand and qualified individuals
In conclusion, an organization can use both an entitlement compensation philosophy and a performance-focused compensation philosophy. In such a scenario, they will be working in a consortium. However, currently, many healthcare facilities are trying to break up from the entitlement mode of performance oriented. This has been challenging due to the strength of trade unions and historic traditions.