A Peek at the pros ,Influencing your pay check : Importance of Compensation Strategy in a Workplace
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Definition of Compensation
Do your job and demand your compensation - but in that order .Happy employees perform better. and compensation can be introduced
as one of the key factors of their happiness. Compensation should be a part of
your talent management process and also it is part and partial with employee retention.
According to W.F. Casio Compensation includes direct cash payments,
indirect cash payments in the form of employee benefits, incentives, rewards,
to motivate employees to strive for higher levels of productivity‖. Thus,
compensation includes all expenditures of valued resources by organizations for
the employees, including managers and professionals. (W.F. Casio 2003).
Compensation is the remuneration awarded to an employee in exchange for their services or individual contributions to your business. The contributions can be their time, knowledge, skills, abilities, and commitment to company or a project.as an example here’s a list of some of the most common and commonly overlooked types of compensation.
Video link for more reference
https://youtu.be/KqQE_5zghdk?si=tXk3fXgMD5dY-YRw
Types of Compensation
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The most common types of compensation types are hourly pay, Salary
,bonus ,Commissions, Over Incentive plan or achievement award overtime pay,
shift differentials, and longevity pay, profit sharing distributions, merit pay or recognition, tip income, benefits include dental, insurance, medical, vacation, leaves, retirement, travel/meal/housing allowance, child care and tuition assistance, gym memberships and free lunches, employee assistance programs that provide counseling, legal advice, and other
services, health and wellness benefits.
When determining the compensation main responsibilities of
HR will be to identify the internal factors like the company’s budget, number of
employees, the skill set of each employee and their position within the company.
identify job components, complexity levels, and responsibilities. This
information helps determine appropriate salary levels for each job position and
then have to investigate the external factors like , market survey results ,supply and demand , package
that other competitors are paying for similar positions, cost of living By market
research and comparison organizations need to research and compare their
compensation levels with industry for fair payments .
Why is compensation management important?
A well-aligned compensation system can help organizations
achieve their business goals by incentivizing employees to focus on the
behaviors and outcomes that are most important to the company .Employees who
are fairly recognized and compensated for the value they bring to the
organization, are more motivated to perform better that’s the normal process in
each and every organization .and also compensation management is part and
partial in employee motivation and
performance , employee on boarding and employee retention.
As business is competitive when analyze internal and
external factors to determine compensation automatically attract top talent
easily.so if they are paid fairly bonus, increment best employees won’t leave
with the first chance they get.
If the company leadership is doing compensation management
in the correct manner there won’t be employees working in the same position for
a long time, but their wage isn’t up to date with the market with compared to newer
employees in the same position will have higher salaries.
As market analysis is done, in compensation management it
indicates whether companies are paying much more than competitors for a certain
role. This will help companies for the process of setting the salary ranges for
future employees.
Effective compensation management can be done by choosing compensation management software enabling companies to determine the appropriate payment for every employee. An effective compensation system will motivate and incentivize employees to perform well. Employees will feel recognized and appreciated when they are paid fairly for their work.
Conclusion
Major benefits of Compensation management to an organization can be identified as improving efficiency and accuracy, enhancing transparency and fairness, supporting data-driven decision-making, and ensuring compliance and security which contribute to higher employee satisfaction and positive work environment. . Organizations are now very much concerned about the fact that the happier the employee more will be the performance. So they have to put more interest on making compensation policy well suitable for their employees in order to increase their motivation, performance and job satisfaction.
https://youtu.be/mCwMzL2KGE8?si=S9gI0c1D9nZ5RqO1
Available at Cascio, W.F. (2003). Managing human resources: Productivity,
quality of work life, profits 6th ed. Boston: McGraw-Hill Irwin.
Available at https://www.beetechnologybd.com/blog/why-compensation-management-is-important
Available at TRANS Asian Journal of Marketing & Management Research
(TAJMMR) Year : 2012,
Available at ISMAIL, Azman; ABD RAZAK, Mohd Ridwan. Compensation
Management as a Determinant of Job Satisfaction. ipn journal of research and practice in public sector
accounting and management, <https://myjms.mohe.gov.my/index.php/jrpam/article/view/21689
Available at Henderson, R.I. 2009. Compensation management in a knowledge
based-world, Prentice-Hall, NJ
Available at Mabaso, Calvin and Moloi, K.C., The Influence of
Compensation on Talent Retention at a TVET College SSRN:
https://ssrn.com/abstract=2851760 or http://dx.doi.org/10.2139/ssrn.2851760
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