FACULTY: ECCONOMIC MANAGEMENT

DEPARTMENT: BUSINESS ADMINISTRATIOIN

SUBJECT: HRM
UNIT 2: Compensation
Compensation
Introduction

Compensation can be defined as the payment an

employee receives for the services he/she renders. This
unit shall explore, how compensation is determined, the
factors that goes into the determining of salaries and
wages
 Members:

Maxamed duran maxamed.

Siciid cabdulaahi yaasiin.

Siciid cabdulaahi muuse.

Axmed duran ali.

Cabdulaahi axmed jaamac.

 OBJECTIVES

At the end of this unit,

you should be able to:

explain the effects of identify reasons why

define what economic, social and some employees in
compensation is ethical factors on organizations pay higher
salaries and wages wages than others
 Factors Determining the General Pay Level

Economic Consideration

There is a vital relationship between the total amount spent for wages and the
total production which is the total amount of goods and services produced.

Government pay level is not bound by the economic factor.

Social and Ethical Consideration

The social and ethical consideration is what gives rise to the idea of a long wage or
standard minimum wage.

In reality, references to minimum wage is the issue whereby the government should
pay its employees a salary based upon what it costs them to maintain an appropriate
standard of living.
 The Basis of Compensation and Rewards

Compensation and reward administration as a tool of

management is designed to achieve certain objectives:

Competition: One of the

Adequacy: Employees work not
because they wish to assist the
employers to maximize profit but
rather because they have needs to
satisfy. It is therefore the expectation
Equity: A fair day‟s job must philosophical bases of
be followed by a fair days pa
reward management is to
y. And equal work must elicit attract and retain calibre
equal pay. emplhighoyees.
 CONCLUSION

This unit has examined the topic

Compensation and Reward. It has given its
meaning and factors used in determining
it. The most important factors being
economic, social and ethical factors.