MEANING AND DEFINITION OF COMPENSATION MANAGEMENT
ACCORDING TO STEPHEN P ROBBINS "Compensation management is the process of determining cost effective pay structure, designed to attract and retain, provide an incentive to work hard, and structured to ensure that pay levels are perceived as fair."
ACCORDING TO BYARS AND RUE "Compensation refers to all the extrinsic rewards that employee receive in exchange for their work. It is composed of the base wage or salary, any incentives or bonuses, and any benefits".
ACCORDING TO MILKOVICH "Compensation refers to all forms of financial returns, tangible services, and benefits employees receive as part of an employment relationship"
Characteristic/Features
1.It is a heart of every org.
2. It is a measure cost of doing business.
3. It is a basic chief reason why most individuals seek employment.
4.It is exchange relationship i.e. employees or org.gives compensation in exchange of labour given by employees.
5.The should be fair, adequate, secure & acceptable to the employees.
6. Compensation should be designed at a low cost pay structure which will attract, motivate & retain component employees
PROCESS OF COMPENSATION MANAGEMENT
Organization's Strategy
Compensation Policy
Job Analysis and Evolution
Design and Implementation of Compensation Plan
Evolution and Review
OBJECTIVES OF COMPENSATION MANAGEMENT
1. The compensation should be paid to each employee on the basis of their abilities and training.
2. Acquire Qualified Personnel
3. It should motivate the employees towards increasing productivity.
4. It should be capable of taking care of employees for safety and security needs also.
5. It should be flexible and clear.
6. It should not be excessive.
7.Comply with Legal Regulations
IMPORTANCE OF COMPENSATION MANAGEMENT
1. Indicates the relative worth of different jobs.
2. Avoids injustice to workers. Vague feelings and suspicious of unfairness.
3. Facilitates adjustment of existing job within the existing wage structure.
4. Makes promotions and transfers more easily acceptable
5. Provides scientific base for promotion and transfers.
6. Useful for introducing a satisfactory, rational & balanced wage structure.
7 Removes grievances and disputes among employees.
FORMS OF COMPENSATION
Direct Financial Compensation - pay received in forms of wages, salaries, bonuses and commissions.
Indirect Financial Compensation (benefits)- All financial rewards not included in direct compensation. For examples workers compensation, Family & medical leave, Disability Protection,
Approaches of compensation management
There are 3P approach of developing a compensation policy centered on the fundamentals of paying for
Position,
Person
Performance.
ADVANTAGES OF COMPENSATION MANAGEMENT
- Support employee remuneration.
- Raise employee efficiency and productivity.
- Added employee attraction.
- Reduce employee fatigue. Raise employee morale.
- Develop good corporate image.
.- Act as motivating force.
DISADVANTAGES OF COMPENSATION MANAGEMENT
- Quality determination.
- Problem in introduction of new machines or method.
- Demand for higher minimum wages.
- Jealousy among workers.
- Disregard security regulation.
- Problem in determining the standard performance.
MEANING AND DEFINITION OF COMPENSATION MANAGEMENT
Compensation is the total reward received by an employee in exchange for services performed for an organization. It can include both direct pay (salary and wages) and indirect pay (benefits programme).
The e-Compensation systems are those software packages which are bought or developed by companies and are accessible through the company's intranet or over the internet which all the employees would be able to reach it through browsers from anywhere (in case of internet).
Need for E-compensation
- To maintain uniform, error free, accurate compensation
- To retrieve past records within seconds
- To protect the data
- To manage the pay package for international work force
- To calculate easily
- To link other system like performance appraisal, training, recruiting
- To match with budget, financial budget
Types of E-compensation
- Morale and job satisfaction are affected by compensation.
- Base Pay
- Commissions
- Overtime Pay
- Bonuses, Profit Sharing, Merit Pay
- Stock Options
- Travel/Meal/Housing Allowance
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