Essay On Compensation Mgt

2170 words - 9 pages

compensation
COMPENSATION MANAGEMENT

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 lucrative compensation will also serve the need for attracting and retaining the best employees.

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. ...view middle of the document...

Components of job analysis:

Job analysis is a systematic procedure to analyze the requirements for the job role and job profile. Job analysis can be further
Catogarized into following sub components:

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Job position
Job position refers to the designation of the job and employee in the organization. Job position forms an important part of the compensation strategy as it determines the level of the job in the organization. For example management level employees receive greater pay scale than non-managerial employees. The non-monetary benefits offered to two different levels in the organization
Also vary
Job description:
Job description refers the requirements an organization looks for a particular job position. It states the key skill requirements, the level of experience needed, level of education required, etc. It also describes the roles and responsibilities attached with the job position. The roles and responsibilities are key determinant factor in estimating the level of experience, education, skill, etc required for the job. It also helps in benchmarking the performance standards.
Job worth:
Job Worth refers to estimating the job worthiness i.e. how much the job contributes to the organization. It is also known as job evaluation. Job description is used to analyze the job worthiness. It is also known as job evaluation. Roles and responsibilities helps in determining the outcome from the job profile. Once it is determined that how much the job is worth, it becomes easy to define the compensation strategy for the position.

Therefore, job analysis forms an integral part in the formulation of compensation strategy of an organization. Organizations should conduct the job analysis in a systematic at regular intervals. Job analysis can be used for setting up the compensation packages, for reviewing employees’ performance with the standard level of performance, determining the training needs for employees who are lacking certain skills.
Pay structures:
Once job analysis has been done organizations need to decide upon the pay structures. Pay structure refers to the process of setting up the pay for a job in an organization. The process deals with internal and external analysis to estimate the compensation package for a job profile. Internal equity, External equity and Individual equity are the most popular pay structures. Job description provides the in depth knowledge about the job profile and its worth
Pay structures are the strong determinant of employee’s value in the organization. It helps in analyzing the employee’s role and status in the organization. It provides for fair treatment to all employees. Pay structures also include the estimation of incentives.
The level of incentives also depends on the level of job position in the organizational hierarchy.

Internal Equity
The internal equity method undertakes the job position in the organizational hierarchy. The process aims at balancing the...

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