Report a Broken Link: Recommend a Resource: Frequently Asked Questions:. As the module progresses, readers would be introduced to other aspects of compensation management like the components of compensation management, types of compensation, inclusion of variable pay, the use of Employee Stock Options etc. In basic terms, it is paying an employee based upon the decided pay and benefit package for the position. For instance, you might explain to the class, that your company starts all new employees out at the same minimum wage. If for example, the employee is working in an environment that is dangerous, they may get higher compensation for their work, than someone that is answering phones in a safe office environment. Part I focuses on the historical development of personnel selection testing from the late 19th century to the present, with particular attention given to personality testing. Job Analysis Design Job analysis can be defined as the process of noticing and regulating in detail the particular job duties and requirements and the relative importance of these duties for a given job.
To get relief, the employee may decrease his inputs while holding his output constant, or increase his outputs while holding inputs constant — possibly resulting in fighting the system, increased absenteeism, or other undesirable behaviours. Though Maslows Need Hierarchy Theory talks about compensation being at the middle to lower rung of the pyramid and the other factors like job satisfaction and fulfilment being at the top, for a majority of employees, getting the right compensation is by itself a motivating factor. Both the structured collection of reflected real-life experience and the multi-perspective view support readers in making informed and well-balanced decisions. The compensation can be: Completely fixed per month or year Some fixed component, along with a variable component which is decided based on the rating of the employee and his meeting of the targets Total variable component, where the total salary depends on the rating received during The compensation system followed by a company should be regularly evaluated and updated as per its evolving strategies and also based on the moves of its competitors. Evaluation and analysis - In order to decide the right compensation, a company will often look at what other similar positions are paying. Performance appraisal and compensation affected employee performance by51. Exam Topics: Learning and Development 4.
Components of Compensation Compensation as a whole is made up of different components that work as an aid for an employee after retirement or in case of some accident or injury. Although salary is essential, people are most productive in jobs where they share the company's values and priorities. This can be done through the use of market research, surveys, and questionnaires. In particular, there has been a marked increase in the use of pay-for-performance PrP for management and professional employees, especially for executive management and senior managers. This is known as refresher training.
The goal of compensation management is to find quality people who perform quality work and then compensate them in order to retain them and reduce turnover rates. This methodology is composed of pre-existing instruments to measure prerequisites including cognitive abilities, expertise, personality and motivation , and outputs of general creativity. Such a system should be well — defined and uniform and should apply to all levels of the organization as a general system. What will be their duties? Exam Topics: Talent Planning and Acquisition 3. Companies use compensation management in order to find, keep, and motivate employees to do quality work. For example, if quality is an essential value, then it should be implemented through some element of the total compensation system.
Types of Compensations We have learnt about what compensation and its importance is. Compensation Management Defined So you may be wondering, what exactly is meant by the term 'compensation management? Since, this article is intended to be an introduction to compensation management, the art and science of arriving at the right compensation makes all the difference between a satisfied employee and a disgruntled employee. The second hypothesis is the compensation affects the performance t value 3. It gives an elaborate description about each and every job in the company. The title, duties, and responsibilities - What the employee is required to do, helps decide how much they should get paid. The provision of monetary value in exchange for work performed forms the basis of compensation and how this is managed using processes, procedures and systems form the basis of compensation management.
Exam Topics: Employee and Labor Relations 6. Human resource is the most vital resource for any organization. Performance appraisal and compensation affected employee performance by 27% and 24. They make a judgement as to the relationship between their inputs and outputs with those of the others. It would be helpful if future research could pinpoint the reservations that companies have about online pre-employment tests. When talking to your daughter's class about pay, you may point out that your company tries to pay a competitive wage based on the industry standards. The third hypothesis is the performance appraisal affects the compensation t value 10.
The information contained in this blog is subject to change without notice. What is common to them is that the reward that we get for expending our energy not to mention the time is that we are compensated for it. Both individual incentives and group incentives are applicable in most cases. Thus, compensation management is the act of distributing some type of monetary value to an employee for their work by means of the company's policy or procedures. These benefits can include things like free staff development courses, subsidized day care, the chances for promotion or transfer within the company, public recognition, the ability to effect change or bring some changes in the workplace, and service to others. We can say that all the components of compensation management play a very important role in the life of an employee.
Answer : b Reason : The term associated with things such as tuition reimbursement, recreational opportunities etc is benefits which is provided apart form the regular compensation. Clearly, managing a firm's compensation policy is a complex task as it facilitates systematically administered and equitable salaries, reconciles employees' career aspirations with respect to earnings, aligns employees' personal objectives with those of the organization, and keeps the firm's costs under control. The creation of salary ranges and pay scales for different positions within an organization are the central responsibility of compensation management staff. In recent years, a great deal of attention has been directed to the development of compensation systems that go beyond just money. This aspect is important as studies have shown that a majority of the employees who quit companies give inadequate or skewed compensation as the reason for their exit. The transient nature of models of personality is noted, and current paradigms and the utility and fairness of personality testing for modern organizations is discussed.
Hence, employers need to quantify the employees contribution in a proper manner if they are to get the best out of the employee. A Look at Compensation Management Your oldest daughter has just informed you that her class is inviting parents to talk about their jobs at career day. If you pick the right people and give them the opportunity to spread their wings - and put compensation and rewards as a carrier behind it - you almost dont have to manage them. It is responsible for each and every decision taken, each and every work done and each and every result. To summarize, compensation management is a synchronized practice that includes balancing the work-employee relation by facilitating monetary and non-monetary benefits for employees. Hence, from above discussion, we can infer that option b is correct. This article is the third in a three-part series examining the development of selection testing.