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Ahmed Abdul Qader Ahmed Abdul QaderPeople Ops Manager| HRBP | Peronnel ManagerPublished Jul 25, 2015 Human Resource Management (HRM) has never been as significant as it is today. Companies want to attract, retain and motivate brains to meet objectives. Today Humans are regarded as one of every company’s assets so they need to be efficiently and effectively managed. One of the tools companies use to attract, retain and motivate its people is Compensation Management. In this article, I shall define compensation and benefits along with their advantages for a company and its workers. Suppose, you own a boutique. Let’s call it myWear - or you can give it any name of your liking. You have hired three salespersons and a receptionist. The salespeople are responsible to look after the sales affairs. The receptionist's duties are to handle the cash and manage the account books. I shall refer to this illustration throughout the article. Compensation: In the book Human Resource Management, Gary Dessler defines compensation in these words "Employee compensation refers to all forms of pay going to employees and arising from their employment." The phrase 'all forms of pay' in the definition does not include non-financial benefits, but all the direct and indirect financial compensations. I shall, Inshallah, explain the two terms in my next article 'Parts of Salary'. Benefits: What benefits would you offer to your employees at myWear? Off course, you would offer different benefits to the salespersons and the receptionist. Problem will arise when you begin to decide what benefit to give to whom and on which basis? Employee benefits are not performance-based, they are membership-based. Workers receive benefits regardless of their performances. Employee benefits as a whole have no direct affect on employee performance, however, inadequate benefits do contribute to low satisfaction level and increase absenteeism and turnover in employees (DeCenzo and Robbins; 2007). So you would have to carefully design your benefit package. Your package may include a cell phone to each worker, taking them to a training workshop or seminar, giving them a day or two off every month and so on. While deciding on the benefits package, do consider the associated costs. ADVANTAGES OF COMPENSATION AND BENEFITS. 1. Job satisfaction: Your employees would be happy with their jobs and would love to work for you if they get fair rewards in exchange of their services. 2. Motivation: We all have different kinds of needs. Some of us want money so they work for the company which gives them higher pay. Some value achievement more than money, they would associate themselves with firms which offer greater chances of promotion, learning and development. A compensation plan that hits workers’ needs is more likely to motivate them to act in the desired way. 3. Low Absenteeism: Why would anyone want to skip the day and watch not-so-favorite TV program at home, if they enjoy the office environment and are happy with their salaries and get what they need and want? 4. Low Turnover: Would your employees want to work for any other boutique if you offer them fair rewards. Rewards which they thought they deserved? ADVANTAGES TO YOUR EMPLOYEES 2. Increases self-confidence.
Others also viewedExplore topicsWhat type of pay plan is being used when workers are paid a sum for each unit they produce?The correct answer is D) piecework. In a piece-wage system, compensation is paid for each good produced.
What do you mean by the term reward in compensation management?Rewards are monetary or non monetary compensation apart from their salary which is given to the employees on account of their performance to motivate them.
What type of compensation includes workers salaries incentive pays bonuses and commissions?Direct compensation includes money paid to employees as cash, such as hourly wages, salaries, bonuses and commission.
What term refers to the shifting of an employee to a new position to which both his status and responsibilities are increased?Job Rotation is a management approach where employees are shifted between two or more assignments or jobs at regular intervals of time in order to expose them to all verticals of an organization.
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