MG302 ASSIGNMENT 2

Name: Gillian Ariki

ID; S11087985

Campus: Hon

No of word: 1520 wds

Remuneration according to Ismail (2020) includes gifts, awards or promotions rewarded to
employees for the completion of organisational tasks. It is the way by which employers and
organisations reward their employees. Remuneration when used correctly can be of great
value to organisations, since it can attract, retain and motivate employees to perform
willingly to the best of their abilities, thus leading to high productivity and higher sales for
the organisations. Remuneration is therefore one of the strategies used by organisations to
achieve strategic business objectives.
Employees are the main assets of any organisation. They are at the forefront of a business’
every day running; since they are the ones to face customers, clients and the general public,
therefore their role and presence in an organisation is of great value to the organisation,
especially in working towards achieving the organisational strategic objective goals. Since
employees are at the centre stage of successful accomplishment of business objectives, their
retention and motivation is of great priority; this is when remuneration comes in; where
employees are rewarded accordingly for tasks they have performed. Employees therefore are
the centre link between organisational remuneration practices and business objectives,
because it is the remuneration practices that will affect the performance and behaviour of
employees towards the business objectives. The different aspects of employee behaviour that
can be affected by remuneration practices which in turn can contribute to the achievement of
the strategic business objectives are outlined below.
First of all, Remuneration practices has been linked to job performance of employees.
Employees are able to perform better when they are adequately rewarded for their work. This
is because they have families to feed and needs to be met, therefore by rewarding them, they
can be able to meet all their needs, and since they are well rewarded, they will be fully
committed to their job by being early, always present at work and being able to perform to
their utmost abilities, which then will be able to meet their companies strategic objectives. A
study by Calvin (2017) has found that remuneration is a motivating factor for employee
performance and that remuneration has been positively and significantly linked to good
performance. This is also what happened here in the Solomon Power Company, where in the
staff are fully committed to their jobs and performed well, due the remuneration practices of
the company, wherein employees are offered annual Christmas shopping vouchers plus other
pay incentives.
Secondly, Remuneration has been linked to employee motivation and employee satisfaction;
two important aspects that can fuel business productivity and competitiveness. A study
carried out by Cahyanugroho et al. (2016) has found that remuneration has a significant
impact on employee motivation. Motivation is important for achieving strategic business
goals, because a lack of can affect the morale of workers who in turn will be less likely to
work wholeheartedly towards achieving a business objective. As stated by Satika (2019)
“Remuneration affects employee behaviour and motivates him, to behave accordingly to the
norms and rules established by the organization”. In Solomon Island, the Solomon power
employees are highly motivated to work, because the company has awarded them free power
units each month; meaning they no longer have to pay for power; this in turn had motivated
them to perform well, as a result Solomon Power Company is one of the most successful state
owned company in the Solomons.
The third point is that employee satisfaction, is in some ways attributed to remuneration.
Employee satisfaction is a necessary ingredient that can improve the level of employee
performance, because a dissatisfied employee cannot perform well and as a result may slow
the progress of goal achievement. Negash et al. (2014) has mentioned that lack of
compensation can negatively affect the level of employee job satisfaction, performance and
overall reputation of all organization. In Solomon Islands during and in the aftermath of the
covid-19 pandemic, the front liners, including doctors, nurses and others have complained in
the media that they were not compensated for the job they have done during the pandemic.
This has led to absenteeism, low work performance, lack of commitment, especially on the
part of many nurses during the pandemic. This is reflective of the lack of the accomplishment
of the ministry’s objectives of providing quality health service to the people of Solomon
Islands; again a sign that remuneration has a direct link to achievement of strategic business
objectives.
Fourthly, remuneration has been employed as a strategy towards achieving strategic business
objectives, through the level of productivity, growth and competitive advantage that various
remuneration practices have rendered. Remuneration can create employee loyalty, whereby
employees are loyal to the organisational objectives thus preventing them leaving the
company, as they are already satisfied with what they receive. Furthermore, the more they are
satisfied with their remuneration, the more engaged and committed they will be to their job,
which in turn will result in a greater productivity and competitiveness for the organisation.
This is proven by Milkovich (1998) who states that pay incentives have helped motivate
employees to increase their sales productivity. Organisations with effective compensation
strategies have higher productivity levels compared to others (Xanthopoulou et al.2009).This
is further proven by Peterson et al (2011) who mentioned that employees who are well
remunerated, performed exceptionally and are more likely to work towards attaining the
organisation’s objectives. As such we have seen how remuneration has impacted the
productivity and competitive level of organisations, thus achieving the strategic business
goals to become productive and attaining a competitive advantage over its competitors.
Soltuna Company in Solomon Islands is an example of a company that has its productivity
level increased, due to the implementation of non-financial remuneration in the form of
performance feedback, safe work environment for female workers, equal gender treatment,
employee promotion, retention and trainings. For example, they have set up a policy on
respectful workplaces that discourages bullying and harassment. Also, they have a supportive
system in place to support employees who are victims of domestic violence; furthermore,
they provide an avenue for reporting and raising concerns. With these mechanisms set in
place, the company has seen a reduced absenteeism level and have earned an additional
$1,580,000 in productivity (Soltuna n.d).Thus, we can see the relation of remuneration
policies and practices to strategic business objectives.
From the above discussions, we have witnessed that employees are vital players in achieving
organisational goals, therefore their retention and loyalty to the organisation is very
important, because strategic business objectives would not be achieved if along the way, the
employees kept on leaving the organisation for another. To avoid such loss, employers may
improve on remuneration policies and practices in order to retain or attract skilled and
qualified employees. The need for retaining employees is also echoed by Xanthopoulou et al.
(2009) who states that in order to meet specific organizational objectives; organisations
require people that perform exceptionally. Soltuna a tuna processing company in the
Solomon Islands as an example, has been implementing remuneration policies that aims to
curb the turnover rate of women workers, by attracting, retaining and engaging them. One of
the company’s policy is to ensure gender equity and a supportive workplace. The Gender
equity policy was used to train female workers in “non-traditional and higher paying roles”
such as fork lifters and security guards, in order to retain female employees, because they
found that females cause less damage and are more careful in their driving than male drivers.
(Soltuna n.d)
From the above discussions, we have seen the link between remuneration and strategic
business goals, however there has to be a harmony between the remuneration policies and
strategic business objectives in order to have any organisational benefits; As was proven by
Gerhart (2000) who mentions that appropriate alignment of a firm’s business strategy to its
system of compensation will ultimately lead to improved organisational effectiveness. This is
further reiterated by Stone, Cox and Gavin (2021), “For an organisation to attract, and retain
the employees needed to achieve the organisation’s strategic business objectives, benefit
programs need to be designed in harmony with the organisation’s strategic business
objectives and culture”.
In conclusion, it is evident that remuneration policies and practices does have a link to
strategic business objectives. Employees are at the centre of this link, because they are the
ones affected by the remuneration and their reaction will in turn affect the achievement of
strategic business goals. As was stated in the discussion, remuneration can affect employee
motivation, and performance, and satisfaction, engagement and employee loyalty. These
behaviours can lead to competitive advantage, growth and high productivity level in an
organisation. This is evident from the examples discussed above, whereby the companies
practicing better remuneration practices and policies have seen an improvement in their
productivity level. Simply put, in order for an organisation to achieve its strategic business
objectives, it has to align its remuneration policies and practices to its organisation objectives.
And that can be done through remuneration whereby employees are adequately rewarded for
their performance, whilst in turn create job satisfaction, leading to greater motivation, loyalty
and commitment to a job, thus contributing towards the achievement of strategic
organisational objectives.
 References

Bloom,M & Milkovich,G,T 1998, ‘Relationship among risk, incentive pay and organization
performance, Academy of Management Journal.vol.41,issue.3,pp.283-297
Cahyanugroho,A,Hubert,M & Wijayanto,H 2016, ‘The effect of Remuneration on motivation
that implicates employees’, Performance in XYZ company. Indonesian Journal of
Business and Entrepreneurship, vol.2, issue.2.
Ismail,I 20119, ‘Remuneration and Perfvgoramnce’, Creative Commons, Universtas
Tunojoyo, viewed 27 April 2023,<https://doi.org/10.1051/shsconf/20208601034/
Negash,R,Zewude,S & Megersa,R 2014, ‘The effect of compensation on employees
motivation:In Jimma University academic staff. Basic Research Journal; of
Business Management and Accounts, vol.3, Issue.2, pp.17-27
Ojeleye,Y,C 2017, ‘The impact of remuneration on employees’ performance (A Study of
Abdul Gusau Polytechnic,Talata-Marafa and State College of Education
Maru,Zamfara State)’, Arabian Journal of Business and Management review
(Nigerian chapter),vol.4.issue.2.
Peterson,S,J,Luthans,F,Avolio,B,J,Walumbwa,F,O & Zhang,Z 2011, ‘Psychological capital
and Employee performance: A latent growth modelling approach’, Personal
Psycholocoly.vol.64,issue.2,pp.287-315
Satika,E 2019, ‘The impact of Remuneration on employee performance in the trading
company ‘, research gate, viewed 27 April 2023,
https://www.researchgate.net/publication/336149687
Soltuna n.d, Gender-Smart Investing: Agriculture case study,icrw,viewed 27 April 2023,
https://www.icrw.org/
Stone,R,J,Cox,A & Gavin,M 0221,Human Resource Management,10th edn, John Wiley &
Sons, Milton, QLD.
Xanthopoulou,D,Bakker,A,B,Demerouti,E & Schaofeli,W,B 2009, ‘Reciprocal relationships
between job resources, personal resources and work engagement’, Journal of
vocational Behaviour,vol.74.pp.235-249