Compensation
Compensation
Compensation has a different definition to different organizations. According to Dictionary.com, “compensation is defined as the act or state of being compensated or something is received or given as an equivalent for services, debt, loss, injury, etc.” In the business world, compensation is the total monetary and non-monetary pay and benefits provided to an employee by an organization for performing their job duties as specified and required. Compensation is based on numerous factors such as; market research on similar jobs in the marketplace, the availability of employees with similar skill set, employee contributions and accomplishments, the amount of funds the organization has allotted for compensation and benefits, and how well an organization wants to attract and retain specific employee for the value for which they perceive to add to the employment relationship. Compensation comes in many forms such as; bonuses, overtime pay, sales commission, company vehicle, vacation time, and even company paid housing, etc.
All companies with employees must determine a plan on what and how to pay their employees, as well as to when to offer raises, bonuses, and other incentives. This is where the compensation philosophy is developed. This is the actual plan for how employees are to be paid, when payments will rise, and when bonuses are appropriate. Influences on the compensation philosophy are present revenue and anticipated profits in the future, market value of the jobs for which the company is hiring, and the degree of competitiveness in the types of jobs a company offers. Another factor one must take into consideration is the way an organization views its employees and its responsibility to those employees into the development of a compensation philosophy.
The compensation strategy needs the support, very strong support, of top management as it sets stringent limits to the daily operation of the line management and the usually do not fully
Compensation has a different definition to different organizations. According to Dictionary.com, “compensation is defined as the act or state of being compensated or something is received or given as an equivalent for services, debt, loss, injury, etc.” In the business world, compensation is the total monetary and non-monetary pay and benefits provided to an employee by an organization for performing their job duties as specified and required. Compensation is based on numerous factors such as; market research on similar jobs in the marketplace, the availability of employees with similar skill set, employee contributions and accomplishments, the amount of funds the organization has allotted for compensation and benefits, and how well an organization wants to attract and retain specific employee for the value for which they perceive to add to the employment relationship. Compensation comes in many forms such as; bonuses, overtime pay, sales commission, company vehicle, vacation time, and even company paid housing, etc.
All companies with employees must determine a plan on what and how to pay their employees, as well as to when to offer raises, bonuses, and other incentives. This is where the compensation philosophy is developed. This is the actual plan for how employees are to be paid, when payments will rise, and when bonuses are appropriate. Influences on the compensation philosophy are present revenue and anticipated profits in the future, market value of the jobs for which the company is hiring, and the degree of competitiveness in the types of jobs a company offers. Another factor one must take into consideration is the way an organization views its employees and its responsibility to those employees into the development of a compensation philosophy.
The compensation strategy needs the support, very strong support, of top management as it sets stringent limits to the daily operation of the line management and the usually do not fully