Compensation Management: Coherence between Organization Directions and Teacher Needs
| DOI | https://doi.org/10.1108/09578239310024719 |
| Published date | 01 January 1993 |
| Date | 01 January 1993 |
| Author | Vivian J. Hajnal,Dennis J. Dibski |
| Subject Matter | Education |
Compensation
Management
53
Compensation Management:
Coherence between
Organization Directions and
Teacher Needs
Vivian J. Hajnal and Dennis J. Dibski
University of
Saskatchewan,
Canada
Many scholars who are interested in school improvement value coherence.
Leithwood[1] calls for coherence between organizational goals and individual
goals,
between tasks and
goals,
and among
tasks,
organizing modes, personnel
policies and decision making. He suggests that coherence, "the degree to which
conditions created
in
one design element supported or conflicted with the effects
of conditions
in
other design elements, explained much of the success or failure
of changes in
design"[1,
p.
74].
Employing the word "parallels", LaRocque and
Coleman[2] describe six foci for positive district ethos and point to the need
for consistency between classrooms, schools and district. One conclusion
reached about this call for unity in purpose is that all decisions should move
the organization in the same direction.
Decisions regarding compensation are important to school organizations and
should be made with the concept of coherence in
mind.
Compensation policies
should be in step with the ethos of the organization. Only when there is a fit
between the policies and the goals of the
school
organization
will
the motivational
benefits of salary be optimized.
Although salaries
in
educational systems have hovered around 60-80 per cent
of total operational budgets, scant attention has been paid to the possible
contribution of this expenditure to the support of effective schools. The first
section of the article examines the nature of the compensation system, its
purposes, structure and form. The second section closely examines direct
pecuniary compensation. The third section
evaluates
various pay-for-performance
strategies, while section four emphasizes the necessity for coherence with
organizational purposes.
The Nature of the Compensation System
Compensation theorists and practitioners suggest that compensation may be
viewed from economic, political, sociological, and psychological perspectives,
and that each perspective leads to recognizing that compensation serves many
different
purposes[3].
According to Hills[4], the objectives of compensation are
to get employees to join the organization and to motivate them to behave in
ways that are congruent with the organization's needs.
Constraints faced by the organization, such as its ability to pay, legislation,
labour unions, and internal and external labour market forces, affect its
Journal of Educational
Administration, Vol. 31 No. 1, 1993,
pp.
53-69. © MCB University
Press, 0957-8234
Journal of
Educational
Administration
31,1
54
compensation system. Milkovich and Newman[5] suggest that compensation
should
aim at
achieving efficiency, equity and
compliance.
Efficiency encompasses
improving productivity and controlling labour
costs,
equity provides for
pay
that
is fair
in
relation
to
employee contribution and employee
needs,
and compliance
involves conforming to the laws of the land.
While compensation serves various organizational purposes, it also provides
a system of different kinds of
rewards
for the employee.
A
better understanding
of the reward system, and its effect on employee attitudes, satisfaction, and
motivation,
may
be obtained
by
thinking of it as a tripartite system consisting of:
(1) pecuniary rewards;
(2) non-pecuniary extrinsic rewards;
(3) non-pecuniary intrinsic rewards.
Pecuniary Rewards
Pecuniary rewards may be further subdivided as being direct or indirect in
nature[5].
The direct components of pecuniary compensation are described
by
Milkovich and Newman[5, p. 4] as base pay, merit pay, incentives, and cost
of living adjustments. Henderson[6,7] describes pay for work and performance
as composed of base pay, base pay add-ons, pay for results, professional
achievement
pay,
educational incentive
pay,
safety
pay,
suggestion
awards,
patent
awards, salary advances, travel expenses, and clothing
allowances.
In
a
simplified
version, Henderson employs the categories of base wage and salaries, wage
and salary add-ons, and incentive payments. Balkin and Gomez-Mejia[8], in
providing an integrated framework for a compensation system, divide direct
payments into entry and contingent categories. Entry refers to the salary that
a person is assigned on commencing employment. The second category,
contingent, refers to
all
the increases that a person acquires after employment
begins, usually based
on
seniority, cost of living, equity considerations, increases
in formal qualifications, and performance criteria.
Indirect compensation
is
broadly considered benefits and services. Specifically,
Henderson[6,7] mentions seven dimensions which may be subsumed in the
category of benefits and services:
(1) Pay for time not worked (vacations, sick leave).
(2) Loss of
job
continuation (unemployment insurance).
(3) Disability income continuation.
(4) Deferred income (pension plans).
(5) Spouse or family income continuation (life insurance).
(6) Income equivalent payments (counselling, parking).
(7) Health, dental, and liability protection.
These indirect benefits can cost from 20-60 per cent of base pay, and average
about 39 per cent of base pay in the USA[4,9].
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