This action might not be possible to undo. Are you sure you want to continue?
The main objective of compensation strategy is to give the right rewards for the right employee behaviors. Compensation is an important motivator when you reward achievement of the desired organizational results. Compensation strategy can reinforce the organizational culture that you desire. You must clearly define the objectives of your organization so that you can achieve them by using compensation strategy. Types of Rewards There are two types of rewards, monetary and non-monetary. Monetary rewards include salary, bonus, commissions, medical and health benefits, holidays, and retirement benefits. Among the non-monetary rewards are meaningful and challenging works, recognition and career advancement, safe and healthy working environment, and fair treatment.
How You Can Make Good Use of Compensation Strategy
You can use compensation to attract and retain competent people. When you want better customer service, reward employee behaviors that produce superior service. Do not harp on the amount of salary you are paying yet at the same expect good performance. Equitable Compensation Like employees working elsewhere in other organizations, your people are concerned with compensation equity. Take this into consideration in drawing up your compensation strategy. Determining Rates of Pay y Pay increase based on employee's length of time spent on the job. This is seniority-based pay that is a good motivator in employee retention. But here, you are not rewarding performance. y Performance-based pay is intended to motivate employees to perform better. Such a plan is becoming more common whereby the manager and employee agree on the job goals and performance criteria at the beginning of a specified period, usually at the beginning of the year. The effect of this as a motivator can vary from time to time and from situation to situation. y You can give pay increases based on job-related skills and knowledge. This is intended to motivate your people to gain additional skills, acquire new competencies and knowledge. Under this method, you do not pay employees for the job they are-doing, their job title or seniority. Salary Increases Your compensation strategy needs to align your compensation objectives to your organizational business objectives. Anomalous Salary If you have any employee whose salary is below the minimum for the job or too low in relation to the employee's performance and experience, make the necessary adjustment. Compensation and Strategic HR Management Use compensation strategy to: monitor cost-effectiveness Are you getting good returns from the compensation methods that you have adopted? verify legal compliance Are there legislation that may prohibit the way your organization is managing its compensation scheme? determine pay equity Are you using strategy to minimize or eliminate pay disparity in order to achieve maximum employee motivation? and
y y y
" The Report finds that strategic compensation is a significant contributor to different forms of competitive advantage. and reviewing or evaluating the outcomes. . or continuous process. y y y y y y Necessity to Rethink Approach to Compensation Strategic compensation is the type of compensation that can achieve its intended purpose.y link pay to performance Corporate Transformation and Compensation Strategy It is stated in a Report "Strategic Compensation: How to align performance. and employee satisfaction. Compensation strategy is the course of action taken to ensure that this purpose is attained. These are: y y y y translating business issues into compensation or HR interventions designing and delivering them with key objectives leading the resultant change process. pay and rewards to support corporate transformation" that it involves four strategic elements in a closed loop. including better business results more effective performance stronger capability higher staff attraction and retention levels heightened motivation.