Premium Essay



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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...The concept of pay performance is attractive to the public sector because its basis is rooted in the perception that superior performance should be acknowledged and rewarded. Its implementation is varied, consisting of individuals, work groups, or departments being evaluated and having financial incentives distributed as base pay increases, one-time bonuses, or a combination. “Merit pay” is a term typically associated with pay for performance where individual performance ratings are directly correlated to annual salary increases in hopes that the incentive with increase employee effort and productivity. However, the critical component that directly affects success with this pay structure is employee perception on how equitable and attainable the expectations are within the incentive plan. Employees form beliefs and take actions based on how satisfied they are with their jobs as well as an opinion about state agencies as places to work and pursue careers. If these employees feel that the performance appraisal systems are not fair, then they will not be motivated by the premise of linking their pay to incentives. Moreover, these same employees will eventually become disgruntle and work at less productive rates because they feel as though “politics” or favoritism determines the outcome of their evaluations not 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...

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