Absolute value, relative value, and added value（similar to fringe benefits）
Humans are the beginning point and ending point of all social sciences.
How to create a compensation management that can truly meet empolyees' needs.
According to Alderfer's ERG theory, every one has three levels of bottom-up needs, namely, existence needs, relatedness needs, and growth needs.
How to meet employees’ three levels of bottom-up needs from the perspective of compensation management? I think the best way to do it is three-tier compensation.
What are three tiers of compensations? They are respectively absolute value, relative value, and value added（similar to fringe benefits）.
What is three-tier compensation? It is the integration of three tiers of compensations.
At the bottom of three-tier compensation is absolute value which is designed to meet employees’ existence needs. In other words, absolute value is the amount of money one employee expects to receive from his or her employer based on his or her job.
There are different standards of living among people, so, to keep in mind, existence needs do not certainly mean low level of living, a simple diet, or the least money, particularly to those companies being in starting stage.
In the middle of three-tier compensation is relative value which is designed to meet employees’ relatedness needs. Whether one employee is satisfied with his or her relative value mainly depend on how to compare with their co-workers.
Obviously, an impartial and transparent compensation management system will make it easy to meet employees’ relatedness needs inside a company, because under this situation, employees tend to have less jealousy and hate.
On the top of three-tier compensation is value added which is designed to meet employees’ growth needs.
Value added usually involves those projects and programs that are helpful to boost employees’ career development and physical and mental health, such as training opportunities, sound corporate culture, fair and equal competition opportunities, flexible working hours, comfortable office environment, good interpersonal relationships, and so on.
As with three-tier management, three tiers of compensations are also an indivisible whole. One of three tiers of compensations alone—whether absolute value, or relative value, or value added—will not be able to bring high degree of satisfaction on Alderfer's three levels of needs to employees. Only the smooth integration of three tiers of compensations can do so.