COMPENSATION MANAGEMENT

INTRODUCTION: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 lucrative compensation will also serve the need for attracting & retaining 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.

OBJECTIVES OF COMPENSATION MANAGEMENT: 1. To establish a fair and equitable compensation offering similar pay for similar work. 2. To attract competent and qualified personnel. 3. To retain the present employees by updating wage levels in tune with competitive units. 4. To motivate people to perform better. 5. To minimize the chances of favoritism while assigning the wage rates. 6. To improve morale of employees. 7. To reduce the incidence of quitting, grievances and fractions over pay

SCOPE OF COMPENSATION MANAGEMENT This project throws light on wage and salary administration. Compensation management includes various types of incentives, fringe benefits, job evaluation. The research will help to understand how to design a good compensation package by analyzing incentives and fringe benefits.

The Future of Compensation Management

Compensation management continues to evolve. As we continue to develop new theories about what motivates employees well continue to see new approaches to compensation. The key intent of compensation and compensation management is to attract and retain talent. Of course, money is always considered a primary motivator, but the debate continues over just how much. Monetary compensation definitely has some effect but according to most studies, it varies among different types of workers. Some groups thrive on just commissions such as sales representatives; some prefer a fixed salary such as manufacturing workers, while others prefer a fixed salary plus an incentive plan, particularly management. There is a limit, however after which increasing pay doesnt give proportionately increasing returns. Based on this, tactical compensation programs are created. The plans are designed to deliver the maximum impact. Compensation packages are developed to include different compensation programs to entice employees and reward them appropriately. Depending on the environment, compensation packages are developed to attract and retain talented employees. There is no direct way to measure what an individual would like but compensation packages typically include:

Cash compensation Short term incentive compensation (Bonus programs) Long term incentive compensation (Stock programs)

There are other compensation types that we will not cover in this books:

Non-monetary compensation, such as Anniversary awards Perquisites like Club memberships Health benefits Pension schemes Sales incentives & commissions

Compensation is not the only motivation that was previously believed. Motivation also comes from growth opportunities, acceptance and recognition, opportunity to international travel, etc With globalization, blending different kinds of compensation packages has become more art than science. Instead of compensation, many companies are now addressing it as total rewards and in future it might even become Motivation Packages. Executive compensation is a field in itself. This population though small is also very critical. The administration of this small group is critical and

sometimes requires a lot of exception handling. They impact all aspects of compensation and payroll. The concept of broad banding has been adopted by many large companies to avoid proliferation to multiple ranges. It also provides managers with the flexibility. Each chapter needs to be its own document and it should end with a Summary