The main purpose of this chapter is to ponder the compensation system that characterizes SMEs the most, both internationally and in Colombia, and to know about social responsibility regarding compensation. To reach this objective, a trip is made through the history of salaries worldwide up to compensation in Colombia, when the minimum legal wage in force is defined. Social responsibility in a compensation system is pondered and the forms that characterize compensation in organizations, mainly in SMEs, are described. It is concluded, among other aspects, that incentives for performance is the way used by SMEs to compensate their collaborators, specially their CEOs.
TopIntroduction
Having clear and responsible criteria to compensate performance of the human resource per results is a key duty of human resources management in any organization, no matter its type and size. As mentioned by Varela (2013), a compensation system is successful not for paying the best salaries in the market, but for having in balance the elements forming this system, e.g. wage, incentives, and benefits.
History of salaries go as far as the Ancient Age when payment of wages was made based on a unit of wheat. In Egypt for example, there are texts of the Ancient Empire that show the way workers were paid: “All those who have worked building my tomb, have done so in exchange of bread, fabric, oil and wheat in great quantities” (Varela, 2013, p. 3).
A description is also made on the approach an SME must apply so as to be considered a socially responsible enterprise in a compensation system. Having clear and equitable policies will contribute to a fair compensation, considering also the market’s perception as to what should be the most adequate compensation system, according to the size of the organization and the sector to which it belongs. The main conclusion of this research is that although salaries are lower than those paid by big companies, incentives to remunerate performance and productivity of workers, particularly CEOs, is the typical form of retribution and motivation to collaborators used by SMEs.
Considering the foregoing, the main purpose of this chapter is to ponder the compensation system that is more characteristic among SMEs, both internationally and in Colombia, and to know what to be socially responsible means, with respect to compensation.