Total compensation encompasses all of the resources available to employees such as money, benefits, and services that reward the employee for their services with the company (Virginia Tech). A total compensation package covers may aspects such as extrinsic and intrinsic compensation. Extrinsic compensation is more of the monetary or legal means behind paying employees. Intrinsic compensation is the quality of life at work such as job variety or management feedback. Companies can use their compensation packages to attract certain types of employees and also retain them for an extended period of time. However, the reward of total compensation to attack and retain employees has not always been the manner in which companies treated their staff. For more years in history than not, companies would work their employees incredibly hard resulting in employees putting forth much of their life’s to work and receiving very little in return.
Laws and Regulations
The Fair Labor Standards Act of 1938 (FLSA) had a significant impact in the manner in which employees are to be rewarded for their work. FLSA set a minimum wage for employees to be paid, it established an overtime premium of time and a half for hours beyond 40 in a seven day period, and it set guidelines for how much minors were able to be worked (DOL, 2015). Equal Pay act of 1963 said that employers were not allowed to segregate their wages based on employee’s gender. This act created an historic definition of equal work; requiring both sexes are to receive equal opportunity for compensation.
Women have generally always been paid less than men for doing the same jobs and the Equal Pay Act has been enforced to remedy the issue. Furthermore, the Civil Rights Act of 1964 went on to make sure that no person was discriminated against for race, color, sex, national origin, or religion. This would include areas such as the hiring process; employee reviews, working conditions, promotion opportunities (National Archives). This act was the forefront of dissimilating discrimination not only in the work place but also in all business and educational establishments whether an employee, customer, student, or teacher.
Taking the HR Consultant Role
There are many things to consider within each company when it comes to creating a total compensation plan. Hiring a federally contracted employee in the government technology requires a different approach than hiring cashiers at a locally owned shop. While work related laws are pertain to all working individuals not all business are required to function in the same manner. For example, all working individuals are protected from discrimination. They must also earn overtime when deemed necessary according to FLSA. However, not all employers are required to provide medical leave to their employees. Under the Family and Medical Leave Act of 1993, only employers with 50 or more employees within a 75 mile radius must provide this to employees (SHRM, 2010).
The Davis-Bacon Act requires that federally contracted employees be paid a fair salary based on the current salary in the area. There are several varieties in total compensation available for employers to present a favorable plan to a perspective employee. These rules and regulations maintain some type of standardization from a governmental perspective. The laws and regulations mentioned about were implemented to provide a standard level fairness between employers and employees.
They prevent individuals having to be put through high levels of extreme conditions from doing so without being properly rewarded for that tedious work. Without these laws and regulations companies would have complete control over their company and have the availability to to abuse their power. The establishment of such laws also created a competitive edge for companies when it comes to hiring and retaining employees. Much of today’s successful companies are top competitors because they are employee focused companies. They aim to please the employees because they are aware that if the employees are happy the customers are happy.
DOL. Wage and Hour Division (WHD). Retrieved April 19, 2015, from
National Archives. The Civil Rights Act of 1964 and the Equal Employment Opportunity Commission. Retrieved April 19, 2015, from
SHRM (2010). Family and Medical Leave Act (FMLA) of 1993. Retrieved April 19, 2015, from http://www.shrm.org/legalissues/federalresources/federalstatutesregulationsandguidanc/ ages/familyandmedicalleaveactof1993.aspx
Virginia Tech. Total Compensation. Retrieved April 19, 2015, from http://www.hr.vt.edu/compensation/total_compensation/index.html
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Topic: Organizational Objectives and Total Compensation in Different Markets
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