Compensation Practice Assignment Example | Topics and Well Written Essays - 1500 words

Compensation Practice - Assignment Example Their award winning online banking has served 30 million users. Through their big size, capability and commitment the bank is able to serve the community with superior economic value and services (Our Vision, 2013). Compensation refers to all forms of financial return in terms of tangible services and benefits that the employee receives as a part of employment relationship. It is an integral part of the human resource management that helps in employee motivation and improvement in the organizational effectiveness by paying salary or wage. Salary refers to the payment of the managers or professionals, whose payments are calculated on monthly or annual basis. In contrast, wage is the payment that is received by the workers in hourly or daily basis or for overtime (Bhattacharya & Sengupta, 2009, p. 2).This study deals in understanding the compensation policy of Bank of America Compensation Strategy Compensation strategy is designed depending upon the business strategy and goal. The busi ness goals and objectives are aligned with the Human Resource strategies. The compensation committee devises the compensation plan. The strategy depends upon both the internal and external factors as well as on the life cycle of an organization (Bhattacharya & Sengupta, 2009, p. 3). ... Practices followed by Bank of America The Bank of America follows â€Å"pay-for-performance compensation program† (BOA Compensation Principles, n.d.) which, provides rewards for long term and sustainable result that are aligned to the shareholder’s interest. The primary objective is to provide a tie up between payment and performance while at the same time providing a balancing reward with practical business decision and efficient risk management. All the compensation programs are designed to be consistent with the Compensation Principles, which ensures that the compensation practice does not encourage excessive risk, focuses the employees in managing the company towards long term goals and sustainable values for the shareholders and provides an appropriate realization of the rewards overtime (BOA Compensation Principles, n.d., p. 1). The benefits that the generally provide to their employees include health and dental benefits from the first day of employment, â€Å"Li fe Insurance, Accidental Death, Dismemberment coverage and Disability benefits† (Bank of America, Careers, 2013), retirement benefits, leave benefits like paternity leave, fitness centers, employee cafes and Associate discount program. They also provide a three week vacation when the position starts from entry level. Analysis of the compensation principle The pay of the executive is linked to the performance of the company, which in turn is supposed to increase the stakeholder’s wealth. Compensation also influences the employee wok behavior and organizational performance. This is the measure of paying the employee, which affects the quality of work, attitude towards customers and willingness to be flexible, learning new skills or suggesting