Compensation Philosophy & Management

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Compensation Philosophy& Management

Compensation

Compensation could be defined as “the total amount of monetary and non-monetary payments that an employee receives in return for the services provided”. Or it could be defined as “the remuneration received by an employee in return for his/her contribution to the organization. It should be noted that compensation not only includes the monetary payments but non-monetary payments/rewards as well (Olson, 2003).

Overview of Compensation Philosophy

In today's world of competition; every employer and company must develop an adequate and satisfying Compensation policy. The “Compensation Philosophy” refers to the various benefits used on the part of the employer to attract recruits and to retain their employees (Gilbreth, 2002). It also focuses on motivating the existing employees and to enhance the quality of their work.

Companies adopt different compensation philosophies. A good Compensation involves the components of the employee's salary, incentives based on quality and productivity, and other rewards.

A comprehensive compensation philosophy must lay out the guiding principles to supplement the company's Compensation strategy. However, to make sure that the strategy would aid the organization achieve its goals; the following aspects must be kept in mind.

Does the compensation strategy of the company helps in achieving the organizational goals?

An analysis of the current position of the company in the respective market/industry.

Does the compensation policy benefits the employees.

Such questions should be answered by the HR executives and the company's top management. The employees' compensation packages may look completely different, but the compensation philosophy makes sure that such packages serve their purpose and improves the core values of the organization.

What is a Compensation Strategy?

The compensation strategy of a company is adopted and implemented by the Human Resource department of a company. One major feature of the strategy is to identify the ...