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In: Business and Management

Submitted By rumen
Words 2834
Pages 12
– The sum total of all forms of payments or rewards provided to employees for performing tasks to achieve organizational objectives


Compensation- Nature and scope
• The complex process includes decisions regarding variable pay and benefits • It suggests an exchange relationship between the employee and the organization • It involves design, development, implementation, communication and the evaluation of reward strategy and process of the organization

Compensation Objectives
1. 2. 3.

To reward employees’ past performance fairly, in line with efforts, skills and competencies To attract and retain competitive high performing employees To motivate the high performing employees and reinforce desirable employee behaviour
To remain competitive in the labor market

5. 6.

To align employees’ future performance with organizational goals To communicate the employees their worth to the organization
To provide employee social status

• Strategic compensation
– Using the compensation plan to support the company’s strategic aims. – Focuses employees’ attention on the values of winning, execution, and speed, and on being better, faster, and more competitive..


Strategic Compensation Planning
• Strategic Compensation Planning
– Links the compensation of employees to the mission, objectives, philosophies, and culture of the organization. – Serves to identify the net monetary payments made to employees with specific functions of the HR program in establishing a pay-forperformance standard. – Seeks to motivate employees through compensation.

Compensation Policy Issues
• • • • • • • • Pay for performance Pay for seniority Salary increases and promotions Overtime and shift pay Probationary pay Paid and unpaid leaves Paid holidays Salary compression (A salary inequity problem, generally caused by inflation, resulting…...

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...personal achievement. Many employees were attracted to public sector jobs because of they were perceived to be secure with good benefits. Now, public agencies are moving from the traditional seniority mentality and are becoming specialized to promote higher levels of productivity. “To be effective, the total compensation package, pay and benefits, must meet the needs of employees by providing pay and benefits that are fair compared to other employees and to the job market. For employers, a compensation package is effective when economic rewards are competitive enough to attract and retain employees with valued competencies” (Klinger, Nalbandian, and Llorens 2010). There are several hinderances to the implementation of performance based compensatin systems. Traditional pay structures for the public sectors are based on very detailed job descriptions and centralized control with its origin steeming from the industrial factors of the 1930s. Workers were to perform their duties as stated in the description and left the thinking and decision making to managers. One of the primary factors for the shift in the pay structures for the government is politically motivated. The basic assumption of this model was that jobs change very slowly over time because of the requirements needed to change the standards that define job functions. The economy has challenged this assumption because job functions have evolved to the responsibility being placed on the employee to take iniative......

Words: 1302 - Pages: 6