According to Gary Dessler 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. Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction. Compensation systems are basically developed to reward employees behavior so that they are lead to accomplish organizations overall goals and objectives. How is compensation used?
Compensation is a tool used by management for a variety of …show more content…
Advantage to Your Employees:
1. Peace of Mind: your offering of several types of insurances to your workers relieves them from certain fears. Your workers as a result now work with relaxed mind.
2. Increases self-confidence: Every human being wants his/her efforts to get acknowledgment. Employees gain more and more confidence in them and in their abilities if they receive just rewards. As a result, their performance level shoots up.
How Compensation Plan Will Work: Compensation Plans Develop a program outline.
• Set an objective for the program.
• Establish target dates for implementation and completion.
• Determine a budget. Designate an individual to oversee designing the compensation program.
• Determine whether this position will be permanent or temporary.
• Determine who will oversee the program once it is established.
• Determine the cost of going outside versus looking inside.
• Determine the cost of a consultant's review. Develop a compensation philosophy.
• Form a compensation committee (presumably consisting of officers or at least including one officer of the company).
• Decide what, if any, differences should exist in pay structures for executives, professional employees, sales employees, and so on (e.g., hourly versus salaried rates, incentive-based versus noncontingent pay).
• Determine whether the company should set salaries at, above, or