Compensation

Management

Compensation Philosophy
What are the goals of the organisations compensation system?
What constitutes base salary?
What percentage of compensation should be linked to individual/unit
performance?
What would the benefits programs include and what is the strategy for benefits
management?
What is the role of performance appraisal in disbursing compensation?
How to target the positioning of compensation of employees relative to market?
At what frequency would salaries be reviewed and on what basis would this
review happen?
How does compensation help develop employee skills and competencies in order to
enhance the human capital of the organisation?
How does compensation help attract and retain talent?
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Components of Compensation

Source: William B. Werther and Keith Davis, Human

Resources and Personnel Management, p. 412

Importance of an Ideal Compensation System

Consequences of Pay Dissatisfaction

4

Source: Michael R. Carrell, et al.,

Personnel/Human Resource Management, p. 391.

Importance of an Ideal Compensation System

Motivation and Performance Model

5

Factors Influencing Employee

Compensation

Compensation Plans and Business Strategy

Companies do the following, viewing compensation

from a strategic perspective:

They recognise compensation as a pivotal control and incentive
mechanism that can be used flexibly by the management to attain
business objectives
They make the pay system an integral part of strategy formulation
They integrate pay considerations into strategic decision-making
processes, such as those that involve planning and control
They view the companys performance as the ultimate criterion of
the success of the strategic pay decisions and operational
compensation programmes.
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Challenges of Compensation