COMPENSATION MANAGEMENT
Human Resource is the most vital resource for any organization. It is responsible for each and every decision taken, each and every work done and each and every result. Employees should be managed properly and motivated by providing best remuneration and compensation as per the industry standards. The well-paid compensation will also serve the need for attracting and retaining the best employees.
Compensation is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees.
Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness.
Compensation Management is an advanced salary planning, incentive and stock-planning tool, enabling Managers and Human Resource departments to streamline the focal review process. Compensation-Management also contains a number of tools used by the HR and/or Payroll Administrator.
Components of Compensation System:
1. Job analysis
2. Pay structure
3. Salary survey
Types of compensation:
1. Direct compensation
· Basic salary
· HRA
· Bonus
· Special allowances
· Leave travel allowances
· Conveyance
2. Indirect compensation
· Hospitalizations
· Insurances
· Retirement benefits
· Leave travel
· Home travel
Need for compensation:
1. Motivation
2. Need satisfaction
3. Employee retention
