Human resource is known as a set of individuals in an organization or a business sector that make up the workforce. This term may be used synonymously with human capital, although human capital look at in a narrow view which includes the knowledge a person can embody in an organization. The professional field and discipline of the function of the business that oversees the company’s human resource are known as the human resource management (HRM) or simply human resource (HR). The salary of people in a company is a matter of subject that if overlooked may result into the failure of the company. Therefore, human resource salary is an important aspect that has to be reviewed occasionally based on the performance of these individuals. The salary of employees plays vital roles in the production of the company starting from the top management up to the bottom. The author of this paper presents critical analysis of the factors that determine the human resources salaries, the roles of human resource, the importance of the salary review of employees, and the factors that affect the salary of employees and human resource managers.
Many people may share responsibility in the company but earn different amount of money. Although there are unquestionably other factors that play roles in determining what one earns, most experts have agreed that there are vital roles that are considered over other in determining human resource salaries. The following are the factors that influence human resources salary within a business set up.
Employer Industry and Market Focus: This gives the overall stage for everything, because it reveals the market in which the employer operates. Industries with forceful, active, and lucrative markets believe that the luxury goods, medical materials, energy production firms, or smartphones, for example, will pay much better than industries with slow, unprofitable, and inactive markets. Simply put, those businesses that are growing very fast and making a lot of money will pay relatively higher than those that are stagnant or shrinking and not making enough money.
Job classification, rating, and pay grade: Most of the organizations work with human resource or compensation specialists and professionals to set salary ranges for the different positions they want to fill. Some of these businesses are more flexible than others when going outside those ranges, but the ranges essentially define the pay scale that comes with the given position that is to be filled by the human resource.
Location and history of one’s salary: Geographical location plays an important role in pay rates of individuals, for example, jobs in Des Moines do not pay as those in New York City, Chicago, San Francisco, because of the high cost of living in those places. The cost of living always determines what one is likely to accept from the company since nobody wishes to live beyond their income. On the side of salary history, what one was making in their last salary sets the floor for what he/she will make in the next job. “These an area where those who are seeking a career change find themselves “over-compensated” and unentitled for places they seek because of their prior salaries grossed”(Slaughter et al. 381).
Educational Attainment: Most of the jobs come with baseline and certificate or education requirements, but those who surpass them can presume to be compensated more than those who do not have relevant papers. That said the organization that conferred one’s degrees matters. But those with Master’s degrees and even more usually make more than those with Bachelor’s degrees. On the same note, individuals that have attained some awards, honors, and even gifts after excellent performers are regarded to be competent hence their salaries are increased.
Demonstrable Soft Skills-The best workers are those with good track records or excellent accomplishments. These employees have that ability to write and speak well, and the capability to manage other people, as well as able to handle complex and tricky projects. Accreditations such as the Project Management Professional may play a big role here, but a well-documented record of accomplishment of an individual is the key to demonstrating the good development of soft skills (Slaughter et al. 370). Hence, employees with these characters are at a position of good pay
Human resource department has the authority to review employee’s salary at a given specific times in accordance to the organization rules and regulations. It happens when the contract of such employees are yet to end. The review on the employees’ salaries depends on his/her performance in the company within the time spent.
Salary review motivates the workers especially when the salary is increased. In the research done by the Harvard university in 2009 found that, 80% percent of the people argued that the salary review is important since it motivates employees when the is salary increased (Nicu 1045). There is that natural tension that exists between extrinsic and intrinsic desires and motives, and financial rewards and gifts depress intrinsic goals. In turn, it will influence personal interest of people and at last they will see the effect of working hard. However, decreasing individual salaries takes away their morale and at last most of the people do not get satisfy with their jobs and eventually resign.
Salary review gives an outer view whether the company is progressing or not. The profit making companies are not afraid to award their employees overwhelmingly since workers are the core factors of profit making in a business. By increasing the workers’ salaries, the firm gives a portrait of profit it is getting and the progress being made. The oil company, Chevron, in United States offers high salaries to its workers because it makes large profits in the market. By doing that the company portrays the level at which it is progressing.
Management, training, and employees’ development: One of the reasons to be a business resource officer is to help executives be good managers, which later assist to eliminate distractions for the employees. Employees do not leave bad organizations; they leave bad managers. According to Nicu (1043), Good managers are critical to business but most of them have to learn possible ways to be effective. The critical role of Human Resource in a firm is to aid develop and train directors to do the perfect job possible. Human Resource professionals have much knowledge working with personnel in all kinds of circumstances. Human Resource manager’s role is to guide and support management on how to handle personnel and manage difficult circumstances. The reason HR is significant in assisting managers is that they are capable of managing effectively; glitches that arise will not intensify to the level of interference to the employees.
Hire strategically: Another common way in which Human resource is important is that it can help with tactical hires; this means hiring the right individuals. Hiring right means decreased turnover and improved retention. It means getting the potential individuals who are able do eight times better than the average workers and being capable to persuade them to work in the firm. It also suggests not hiring problematic employees to start within an organization. Pareto Principle rule which states that 20% of the personnel take 80% of the employer’s time (Petrescu 53). Again, looking back at the belief that Human Resource manager is a human resource organizer; hiring right people focuses on growing the industry and not dealing with the problematic employees. “To perform this, a methodical interview process that analyses work ethic, aptitude, attitude, and motivation, and also, in evaluating if they own the needed skills for the position should be observed. HR is an instrumental person in that process” (Petrescu 56).
A wage policy is set to adopt the job evaluation program that will enable fair differentials in salary wages based upon the job contents differences. Beside the known basic factors provided by job evaluation and job description by human resource salary guide, usually put into consideration are the organizational factors and external factors. External factors are influenced by current economic trends, society, and expectation of employee value. Different jobs are more valuable than others. For example in the healthcare set up, a medical records clerk cannot not get the same pay as a physician due to experience, education, and his or her worth to the employer. Moreover, most countries favor seniority, e.g. japan (Nicu 1040). Lastly, Employment legislation is among the external factors that human resource has no or little control over.
Different factors within the industry itself also affect salary structure of personnel. The kind of association and its strategy are the primary consideration. With that, the firm’s human resources are large considerations. What types of employees do the organizations want to employ? Do they want technical members with the great deal of skills, knowledge, or experience? Will these employees pay depend on the level their performance? These are the factors and questions that are needed to be answered in the organizational factors (Petrescu 54). However the organizational factors can be altered since the company has the control over them.
From the discussion above, it can be deduced that human resources salaries are vital factor that has to be observed in every set up of business. The human resources salaries can be influenced by factors such as; Employer industry and market Focus, Job classification, rating, and pay grade, Location and history of one’s salary, Educational Attainment, and Demonstrable Soft Skills. Additionally, review of human resource salaries is very important since it motivates the employees especially, when there is salary increment at the beginning of a new contract. The roles of human resource manager include; hiring employees strategically and managing, developing, and training of workers. Lastly, organizational and external factors are the basic variables that affect the salary of employees in a business set up.
Nicu, Ioana Elena. “Human Resources Motivation – An Important Factor In The Development Of Business Performance.” Annals Of The University Of Oradea, Economic Science Series 21.1 (2012): 1039-1045.
Petrescu, Ion, and Camelia Konrad. “Human Resources Management In The European Context.” Review Of International Comparative Management / Revista De Management Comparat International 13.1 (2012): 49-54
Slaughter, Sandra A., Soon Ang, and Wai Fong Boh. “Firm-Specific Human Capital And Compensation Organizational Tenure Profiles: An Archival Analysis Of Salary Data For It.” Human Resource Management 46.3 (2007): 373-394