Compensation Management
Sanjeevani Hanjura razdan
Talent Acquisition I Employee Relation I Training & Development I Talent Management I HR Analytics I Performance Management I Payroll I
How is the Compensation level Determined?
1. Create or update job descriptions for each position, based on Job Analysis.
2. Determine the appropriate amount of compensation for each grade/level. Factor in overtime.
3. Consider Industry Standards/Benchmarking.
4. Identify the allowances, benefits, and incentives that you will provide.
5. Detail your decisions in a document (Compensation Policy)
Why do HR professionals need to be proficient in Compensation Benefits?!
Objectives of Compensation Management
Compensation management also known as wage and salary administration, remuneration management, or Reward Management, is concerned with Designing and implementing a Total Compensation Package.
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Equity Theory
The equity theory of motivation describes the relationship between the employee’s perception of how fairly is he being treated and how hard he is motivated to work. Systems to Establish a Rational Pay Structure:
Job Evaluation: A job evaluation is a systematic way of determining the value/worth of a job in relation to other jobs in an organization.
It is a process that is helpful for framing compensation plans by the Compensation manager. Job evaluation as a process is advantageous to a company in many ways, such as:
? Helps in standardization of salary differentials for different jobs
? Builds harmonious relationships between managers and employees
? Well-defined jobs and helpful in identifying the value of newly added jobs
Features: Job Evaluation
? Job evaluations are carried out by groups, not by individuals.
? Job evaluation does not fix pay scales, but merely provides a basis for evaluating a rational wage structure.
? Some degree of subjectivity is always present in job evaluation.
? Apart from helping determine the compensation levels, it also helps in determining organizational hierarchy, identifying responsibilities and authorities, helps update data on Job Descriptions and Job Specifications