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What are the external factors influencing Employee Compensation?

Discuss the external factors influencing Employee Compensation.

Answers

Maurice
(i) Technological changes
Technological changes also influence the fixation of wage levels. Due to the advancements in the technology there may be shortage of skilled manpower in that area. So, the organisation will provide high wages for skilled personnel.

(ii) Academic Institutions.
Having good academic qualifications from Reputed and standard educational institution influence the compensation of the potential candidate in their recruitment in companies.

(iii) Inflation
Increase in the prices of commodities and decrease in value of the money is called as inflation. The causes of inflation are many which are raising costs, fall in the currency value in international markets, raising taxes by government and stagnation in the development of economy.

(iv) Laws and Regulations
Laws and regulations impact the remuneration of employees in many areas, such as:Compulsory bonuses,
overtime,employment at will, minimum wage, among others.

(v) Economy
The state of economy also influences the wage and salary-fixation. Wage rates will he different in a stable economy than in a depressed economy. In case of depressed economy there may be increase in supply of labour and this results in the fixation of lower wage rates.
maurice.mutuku answered the question on April 15, 2019 at 12:04

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