COMPENSATION AND BENEFIT

Compensation and Benefit

Compensation and Benefit

Introduction

Compensation may accomplish several reasons like recruitment, job performance, and job satisfaction (Upadhyay 2009, p. 11). In order to attract, motivate, and retain qualified personnel and to reward employees with the potential to assume responsible positions, organization around the world will continue to develop compensation strategies and practices that maintain competitive salaries and that are also consistent with the economic requirements of the organization (Upadhyay 2009, p. 11).

Compensation strategy is just a part of the mega HR strategy and, therefore, the compensation strategy should be fully aligned with the overall HR strategy (Upadhyay 2009, p. 11). So first of all the HR strategy sets up its goals and then from those goals, the compensation goals are derived. When the overall HRM Strategy states the low cost of services and employees, the compensation and benefits strategy cannot target the highest salaries at all levels (Upadhyay 2009, p. 11).

Discussion

The compensation and benefits strategy sets the general rules for the compensation and benefits area in the organization and the owners and leaders of the area (Upadhyay 2009, p. 11). The role of compensation department varies across different organizations, like in some organizations compensation department is just a subordinated department of line manager. In other organizations, the compensation and benefits manager is a very powerful employee in the organization with the right “veto” (Upadhyay 2009, p. 11).

Compensation is probably the most important dimension of HRM function, so it is of outmost importance that compensation should be selected very careful. In basic words, we can say that whole human resource management crust is right compensation and benefit package (Upadhyay 2009, p. 11).

The Motivating Value of Compensation

Pay constitutes a quantitative measure of an employee's relative worth (Chingos 2002, p. 33). For most employees, pay has a direct bearing not only on their standard of living, but also on the status and recognition they may be able to achieve both on and off the job. Since pay represents a reward received in exchange for an employee's contributions, it is essential that the pay be “equitable” in terms of those contributions. It is essential also that an employee's pay be “equitable” in terms of what other employees are receiving for their contributions (Chingos 2002, p. 33).

International Compensation and benefit

There are numerous compensation strategies which are used by firms all over the world (Chingos 2002, p. 33).

Pay for Performance

In pay for performance, an employee increase in pay is dependent on the achievement of some predetermined standards/benchmark (Chingos 2002, p. 33). The biggest strength of pay for performance strategy is that it fosters the system that can measure individual, group or organizational performance, and different (Chingos 2002, p. 33). The weak point of pay for performance is that it might encourage the employee to concentrate on quantity of work and not on quality of work (Chingos 2002, p. 33).

Incentive Based Pay

Incentive base pay is to encourage and motivate employees to go an extra mile and produce above their targeted ...