COMPENSATION MANGEMENT 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 good compensation will also serve the need for attracting and retaining the best employees

Meaning of Compensation
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

When managed correctly, it helps the organization achieve its objectives and obtain, maintain, and retain a productive workforce. Compensation is a key factor in attracting and keeping the best employees and ensuring that your organization has the competitive edge in an increasingly competitive world. Without adequate compensation, current employees are likely to leave and replacements will be difficult to recruit. The outcomes of pay dissatisfaction harm productivity and affect the quality of work life.

Meaning of Compensation Management

Compensation management is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness. The Compensation Management component enables you to differentiate between your remuneration strategies and those of your competitors while still allowing flexibility, control and cost effectiveness. It provides a toolset for strategic remuneration planning that reflects your organization culture and pay strategies.

Compensation Package
Basic Salary Incentives Fringe Benefits

 Perquisites

Need of Compensation Management

A good compensation package is important to motivate the employees to increase the organizational productivity. Unless compensation is provided no one will come and work for the organization. Thus, compensation helps in running an organization effectively and accomplishing its goals. Salary is just a part of the compensation system, the employees have other psychological and self-actualization needs to fulfill. Thus, compensation serves the purpose. The most competitive compensation will help the organization to attract and sustain the best talent. The compensation package should be as per industry standards

Objective Of Compensation Management

 To help the organization achieve strategic success while ensuring internal and external equity. Internal equity- ensures that more demanding positions or better qualified people within the organization are paid more. External equity - assures that jobs are fairly compensated in comparison with similar jobs in other firms Attract qualified personnel Retain current employees Reward desired behaviour Control costs Facilitate understanding

Determining Compensation Factors:

Internal Factors: Employers Compensation strategy Worth of a Job Employees Relative Worth Employers Ability to Pay External Factors: Labor Market Conditions Area Wage Rates Cost of Living Collective Bargaining

THE COMPETITIVE IMPERATIVES: PRODUCTIVITY, QUALITY, CUSTOMER SERVICE, SPEED, INNOVATION, LEARNING.
INCREASED COMPETITION, BOTH GLOBALLY AND DOMESTICALLY, HAS SEEN HEIGHTENED CONCERN FIRST FOR PRODUCTIVITY AND THEN FOR QUALITY. CONCERN FOR QUALITY IS NOT RESTREICTED TO MANUFACTURING INDUSTRIES BUT HAS TAKEN ROOT IN SERVICES, SINCE SERVICES ARE RENDERED TO CLIENTS IN REAL TIME. THERE IS NO CHANCE TO INSPECT AND CORRECT ERRORS BEFORE THE PRODUCT REACHES THE CLIENT; THE SERVICE PRODUCED IS EITHER GOOD OR NOT GOOD, AND IT IS CONSUMED THE MOMENT IT IS PRODUCED. QUALITY DEMANDS ARE IMPOSED NO JUST BY END CONSUMERS OF GOODS OR PRODUCTS BUT BY INTERMEDIATE CONSUMERS AS WELL. EMPLOYES ARE ENCOURAGED TO PROVIED EXCELLENT SEREVICE TO THEIR INTERNAL CUSTOMERS, THOSE TO WHOM THEY PROVIDE SERVICE OR THEIR WORK OUTPUT OR THE N3XT PERSON ON THE ASSEMBLY LINE. SOME ORGANIZATIONS ALSO DEMAND THAT THEIR SUPPLIERS HAVE A SOUND QUALITY PROCESS FOR ENSURING THAT

QUALITY IS A HIGH PRIORITY, THAT IT IS BUILT INTO PRODUCTS, AND THAT IT IS CONTINUOUSLY IMPROVED. MENT TOWARD QUALITY SYSTEMS CERTIFICATION BY THE INTERNATIONAL ORGANIZATION FOIR STADARDIZATION, NOW REPRESENTED IN THE STANDARD, ALSO HAS INFLUENCE MANY COMPANIES. BEING CERTIFIED AS MEETING ISO STANDARD IS SEEN AS A SUBSTANTIASL COMPETITIVE ADVANTAGHE AND IS REQUIRED BY SOME PURCHASERS.

MAJOR ORGANIZATGIONAL COMPETITIVENESS:

APPROACHES

TO

ALTHOUGH IT IS BEYOND THE SCOPE OF THIS BOOK TO EXPLORE ORGANIZATIONAL-LEVEL PRODUCTIVITY AND QUALITY-ENCHANCING STRATEGIES IN GREAT DEPTH, WE WILL DISCUSS SERVERAL MAJOR THRUSTS IN THIS AREA BEFORE TURNING TO A CONSIDERATION OF SOME MORE SPECIFIC TECHNIQUES. THE FIRST IS BUSINESS PROCESS IMPROVEMENT OR REENGINEERING. THE SECOND IS TOTAL QUALITY MANAGEMENT. THE THIRD IS A COMPREHENSIBVE FORM OF EMPLOYEE INVOLVEMENT CALLED THE HIGH-INVOLVEMENT ORGANIZATION.