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This in turn impacts the effectiveness of talent acquisition and retention based strategies.
What is Compensation?
What is Compensation Management?
How Compensation Management Works?
It consists of these 7 steps or stages of the process.
Thus, compensation management needs to be a holistic approach that factors inemployee recognitiontoo.
I have listed the 2 types of compensation management below for better understanding.
Direct Compensation:
Direct compensation is the monetary or cash payments that employees receive for their work.
Indirect Compensation:
Indirect compensation basically consist of the perks and non-monetary benefits that are offered to employees.
Policies with vision:To have a successful compensation management strategy in place polices need to be clearly defined.
These policies need to be inline with the overall values, goals and visions of the organization.
Furthermore, they need to outline the guiding principles as to how employees will be rewarded and valued.
For example, a customer-centric organization would value customer satisfaction and have a bonus strategy aligned with the same.
Broad input:Having input from various stakeholders is required so that there is better buy-in and fairnesses.
This would include details like meeting the minimum wage, equal pay legislation and overtime pay rules, etc.
To simplify this processcommunication softwarecan be used.
Here are a few challenges in compensation management that should help you be better prepared.
Pay audits and transparency in the pay structure are a few ways to keep things in check.
Providing competitive wages while on the tight leash of a budget.
Alternatively a mix of compensation components can be tried which include non-monetary perks and opportunities for development.
Market research and salary surveys are a great way to grain better understanding of current trends.
Flexibility of approach is very important on this front.
This offers tax advantages as income cannot be taxed until it is received.
Retirement savings plans are an example of a deferred compensation plan.
