After watching the PBS segment, compensation for an executive is a lot more complex and integrated than middle tier management. For executives, they have much more of a give and take policy in order of retaining the appropriate talent for their company. Compensation can be used as a motivating factor for employees, and it will encourage people to work harder therefore having higher company morale and productivity. Leadership also plays a major role in determining pay grades for individuals. Typically, a leader should be paid higher than others. Risk factors should be associated with rewards, and executives tend to fall into that category of making risky decisions that can substantially benefit the company. Poor compensation will also make it difficult to attract and retain top talent employees in any industry. When making compensation decisions, it may appear to be excessive when it is very attractive and high. However, if the employee deserves the compensation and works hard for it then it is appropriate as time goes on. Compensation also depends on someone’s level of education and their experience. Therefore, executives have the highest experience and typically a higher education level than others which appears excessive based on compensation, but over time will gradually transpire into appropriate compensation.
There are a few components of compensation that are most essential to motivate executives to lead companies toward competitive advantage. The first, and I would say the most straightforward component, is a well thought out compensation package. When properly used and the more attractive one is, it will attract and retain the best talent in an industry. This therefore leads to a better and more successful company, because a company is only as successful as their weakest link. In today’s world, the expectations of employees are much higher than what they once were so they need to be compensated for their higher performance. As it should be, however, those who do not live up to their expectations should not have as high of a compensation package as those who go above and beyond. Another component of compensation that motivates executives are their bonuses. These will fluctuate according to the performance of their employees and how well the company is doing. This can either be based off of job tiers or from employees as a whole. Bonuses are also used to motivate employees in order for the company to reach the organizational goals. Any kind of compensation beyond a base salary can be used as a motivator and be used for higher employee performance which correlates to better productivity.
