explain the basic compensation objectives of pay systems

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Ensure equity. related to the supply chain department of Square Pharmaceuticals Ltd. are Ensure fair distribution of salaries and wages based upon a proper and equitable evaluation of the job, work performance, and compensation paid within the marketplace. In designing a compensation system, an organization must value the equity concept clearly define the wage and salary differentiations and career growth plans, is as to motivate and encourage the human resource to perform better. Some workers receive an annual bonus for the holidays, or simply to celebrate a year of good service. That is will be looking at pay mix and pay level. Job analysis helps in analyzing the resources and establishing the strategies to accomplish the business goals and strategic objectives. These systems utilize many similar components including job descriptions, salary ranges/structures, and written procedures. 3. Individual Equity There are four basic objectives of compensation: focusing your employees efforts, attracting quality employees, retaining top performers, and motivating your employees. Compensation System Plan The basic aim of compensation administration is to retain, attract and motivate employees towards the job. The goal of the Company is to provide practical solutions to customers in a fast, effective, and efficient manner. Compensation Plan. Part of her job is to periodically review and recommend advisable changes to the company's compensation system. Consider these components, and how to apply them into your business today. ADVERTISEMENTS: The main objective of wage and salary administration is to establish and maintain an equitable wage and salary system. Various compensation systems have developed to determine the value of positions. For some companies, technical jobs are the most vital, whereas for others frontline customer service positions determine the success of the company against its competitors. Compensation-Bemis Corporation The objectives must clearly be defined, must be communicated as soon as decision has been reached. This conflict can be understood by agency theory which explains relationship between employees and employers. Retrieved from http://studymoose.com/4-objectives-of-a-compensation-system-essay, Copying content is not allowed on this website, Ask a professional writer to help you with your text, Give us your email and we'll send you the essay you need, Please indicate where to send you the sample. "College students worldwide dream of starting their careers at Google" (cnn.com). The basic objective of compensation management can be briefly termed as meeting the needs of both employees and the organisation. Compensation systems are designed keeping in minds the strategic goals and business objectives. The strategic criteria associated with strengthening performance places a focus on individual equity. Apart form HR managers focus on their strategic objectives to develop a comprehensive compensation plan, in terms of considering base pay, short and long-term incentives, benefits and growth opportunities. A large part of the reason that Google ranks so highly among lists of popular employers is due to their competitive compensation strategy. 3. Just give us some more time, By clicking Send Me The Sample you agree on the, Human Resource Management, 12e (Dessler) Chapter 4 Job Analysis, A Pay Model and Defining Internal Alignment, Link Between Job Satisfaction and Job Performance. COMPENSATION SYSTEM IN A PRIVATE COMPANY The organizations are The Company provides 24/7 additive injection services to its clients, and is an industry leader having the greatest geographical coverage, additive stocks, and equipment. Total Compensation Package (TCP) is the value of fixed, variable, long-term incentives and benefits. development, compensation plan, etc. putting increased emphasis on the policies and practices of HRM to gain Comply with legal regulations. Additional materials, such as the best quotations, synonyms and word definitions to make your writing easier are hiring, HRM has lots of functions which help an organization to gain Understanding the different types of compensation is essential if you are a compensation specialist, HR leader, payroll specialist, business owner or manager. Update the compensation policy manual; Design communications meetings . Establishing market competitive pay systems is a form of job evaluation, but this time we're moving beyond job content to look at external market pay rates. Employers want to pay as little as possible to keep their costs low. It says that people will evaluate their own compensation by comparing their … As a reflection of leadership’s strategy about how it values its employees, a well-established compensation system allows employers to optimize on employee engagement, productivity, financial resources, and organizational goals. Since the industrial age, the four Ms of business management i.e. Essay . Summary – The Different Forms of Compensation. b.The pay objectives differ with each organization. Cloud computing, advertising technologies, and their search engine are among the most popular services that they offer.  Job descriptions, Google recently ranked 46th on the 2014 Fortune 500 companies and 1st on Fortune 500's best places to work for. Google was founded in 1998 by Larry Page and Sergey Brin who met at Stanford University and is based out of Mountain View, California. Financial compensation includes salary, bonus, and all the benefits and incentives, whereas non-financial compensation includes awards, rewards, citation, praise, recognition, which can motivate the employees towards highest productivity. measurable effectiveness of the job and contribution of job to the organization. This paper serves to identify and discuss the key components and considerations associated with the creation of an efficient compensation system. Compensation will be perceived by employees as fair if based on systematic components. The basic objectives include:-• Efficiency • Equity • Compliance with laws and regulations The efficiency objectives are:-1. Compensation is an important motivator when looking to achieve desired organizational results. By continuing we’ll assume you’re on board with our cookie policy. Get a verified writer to help you with 4 objectives of a compensation system. But as time passed people recognized the importance of HRM in Instructor's grade on assignment: ____________ Jobanalysis They have to find the balance. These systems utilize many similar components including i. (Mayer, 2004, pg. 2). Compensation-Bemis 1 Google Inc. is an American international organization that provides internet related products and services. Compliance- it emphasizes on complying with the state and the federal view the full answer Compliance:It means conforming to federal and state compensation laws and regulations. Acquire qualified personnel. administrative functions of an organization.  Policies & Regulations. MGMT 4030 - Managing Employee Reward Systems Compensation Goals and Strategy Basic Goals of a Compensation System Attract Employees Retain Employees Motivate Employees Compliance with Pay Laws Administrative Simplicity Cost Effective Compensation: Strategic Choices (Gomez-Mejia, Balkin & Cardy, 1998) Job-based vs. for HRM. At a minimum, organizations need to ensure that their compensation policy adheres to employment legislation. If company’s compensa­tion plan is not offering them competitive salary, no employees get attracted to join such an organization an…  Job Analysis, And by improving the performance the employees will get more compensation controlling labour costs. There are 4 Divisional Mangers based in the main operational areas.  Job Evaluation, I also certify that this paper was prepared by me specifically for this course. Compensation System Plan Will the company have an "open" system?•What federal and state laws apply to delivery of compensation and benefit programs, and how will these be implemented?Additionally, best practice organizations adopt compensation principles that ensure fairness and equity in pay rates and salary administration, and transparency in compensation practices. Explore answers and all related questions . This article introduced the reader to the terms of compensation. Explain the basic compensation objectives of pay systems. MBA 506 Efficiency can be stated more specifically as improving performance, increasing quality, delightful customers and stockholders and controlling labor costs. This discussion has provided the find out the facts which are creating barriers to effective HRM. The basic objectives are efficiency, fairness, compliance with laws and regulations and satisfaction of the employees. Related questions. Compensation is the key word in the understanding of remuneration systems, and it may come in several formats. The strategic goals of the Company are to grow into new geographical areas and increase the presence in the existing operational areas, while maintaining the leading position in the market. There was no individual identity Don't be confused, we're about to change the rest of it. Valence of pay outcomes remains the same under different pay systems. It helps in finding out required level of education, skills, knowledge, training, etc for the job position. Further administrative effi… Know the laws relating to compensation. Google Human Resources performed a survey to determine what type of pay is preferred by its employees such as base pay or bonuses. The basic compensation objectives of pay systems include compliance, fairness and efficiency. Pay levels should reflect the value of each type of job to the company’s overall success. It also depicts the job worth i.e. We use cookies to give you the best experience possible. A case study which reflects a compensation plan proposal for Holland Enterprises is included. Pay systems translate the strategy into practice in order to achieve certain objectives. Explain the basic compensation objectives of pay systems. As a small business owner, you need to understand the basic forms of compensation and the types used to pay employees. Instructor Foster Compensation system is designed on the basis of certain factors after analyzing the job work and responsibilities. Improved performance, Increasing quality, Delighting customers 2. That is why effective... ...THE COMPONENTS OF A COMPENSATION SYSTEM :- The basic objectives include efficiency, fairness, ethics, and compliance with laws and regulations. competitive advantage (Islam, 2006). b.Assure a fair distribution of salaries, wages, and fringe benefits by adopting and maintaining a formalized job evaluation system which establishes internal equity between jobs and by administering an effective employee appraisal system to evaluate work performance. The techniques of compensation. Identify and explain 4 objectives of a compensation system. goals and objectives. Compensation and Benefit Systems MGMT 365A Explain the basic compensation objectives of pay systems. For him to know what the pay decision procedure is taken or made is more important than taking more salary, even if it is not much. Employees want to get as high as possible. A compensation system is the sum total … Jennifer Rebarchick The three main components of the Pay Model are the objectives of the pay system, the policies that form the foundation, and the techniques that link the policies to the objectives. These HRM practices include human resource planning, recruitment Compensation System: Compensation is a tool used by management for safeguarding the existence of the company. Policies and techniques are the means to reach objectives. 1. Wage represents hourly rate of pay, while salary refers to fixed monthly rate of pay. (2016, Jul 30). It is not uncommon for organizations to establish specific objectives for compensation program me. discussed. Direct financial compensation consists of the pay an employee receives in the form of wages, salary, bonuses, and commissions. Each form of compensation has types of remuneration (pay). Thus, it effectively contributes to setting up the compensation package for the job position. When the organization improves the performance she will get the benefit from the employees, which will affect the organization’s strategy and will lead to the competitive advantages among other competitors and will achieve the upward momentum, and continuous improvement (virtuous circle). Wages may be based on the num­ber of units produced or sold, or the time spent on the job, while salary is always time-based. Sign up.  Pay Structure, The components of a compensation system include Organizational Goals Make sure to pay employees for their individual performances … Equity Theory What the employee performs should be more than what he gets. To ensure long-term success, organizations need a compensation system that links company strategy to performance, ties the strategy to the labor market, is within legal compliance, and provides a sound salary structure. 2.Administer a system of cost control for human resources’ expenditures to ensure the prudent expenditure of state funds and company’s payments. 1-Explain the compensation objectives of the pay model. Human Resource Management ...Compensation system of an industrial enterprise in Bangladesh:a case study on square pharmaceuticals Instructor's comments: 5. September 19, 2011 Importance of Job Analysis Google is known not only for their innovative technology breakthroughs but also their innovative compensation policies. Job analysis is a systematic approach to defining the job role, description, requirements, responsibilities, evaluation, etc. The objective of fairness is understood differently according to some organizations. COMPENSATION OBJECTIVES Compensation systems are designed and managed to attain certain objectives in any company. Your Answer is very helpful for Us Thank you a lot! Compensation will be perceived by employees as fair if based on systematic components. Human resource management practices are now considered as one of the key 4. Components of a Strategic Compensation Plan: Objectives of compensation management are; 1. The Company is a privately owned service company, providing specialist additive services to the world’s oil traders. b. controlling labour costs:1.The have to control the labour costs in a fair manner that affects neither the company nor the employees. The company or organization should comply with the laws and regulations, especially the rights of the employees and labour. By doing this proper, the organization can motivate employees and make them want to perform better. Human Resource Management (HRM) is a relatively new concept in Compensation-Bemis 2 c.Provide a well-qualified staff to perform the work of the organization by establishing a compensation program that is competitive in the marketplace. They realized that HRM is not just to hire people. Compensation strategies reinforce the organizational culture that you desire, this enables the culture where pay is linked to performance. Based on this, it has the following objectives: (a) To attract and retain competent employees – An organization pays employees a competitive salary to retain then and also attract salary to retain them and also attract skilful employees from also attract skilful employees from outside. Don’t waste Your Time Searching For a Sample, Get Your Job Done By a Professional Skilled Writer. Satisfaction of the employees:Salaries equal competitorsa.This is to equalize the salaries of the employees with the other competitors. Objectives of Compensation Management – Attracting and Retaining Personnel, Motivating Personnel, Optimizing Cost of Compensation and Consistency in Compensation. Control costs. TextAn effective... ... ideas or words, either quoted directly or paraphrased. When the laws and regulations change, there should be a similar change in the same content and in the right and proper direction. Policy guidelines should reflect the thinking, values, and basic strategies of the company, and they must be set consciously and thoughtfully by top management. Retain current employees. Abstract Compensation plans reward employees for contributing to company goals. The basic objectives include efficiency, fairness, and compliance with laws and regulations. 7. 2. competitive advantage. Pay systems translate the strategy into practice in order to achieve certain objectives. Boosta Ltd - 10 Kyriakou Matsi, Liliana building, office 203, 1082, Nicosia, Cyprus. This is so because only a properly developed compensation system enables an employer to attract, obtain, retain and motivate people of required calibre and qualification in his/her organisation. Compensation objectives The basic objectives include efficiency, fairness and compliance with laws and regulations. Be able to define and discuss the types of pay systems and factors determining the type of pay system used. Please join StudyMode to read the full document. When designing a strategic compensation plan, key considerations include criteria for strengthening performance, containing cost, limiting liability, and promoting fair pay. The fairness objective calls for fair treatment for all employees by recognizing both:a)Employee contributions (higher pay for greater performance, experience and training)b)And employee needs (a fair wage and procedures). That go up with increased skills or knowledge, in order to assure they will stay in the organization. Milkovich & Newman: Compensation (8th edition), 4 objectives of a compensation system. Fall 2014 strategic Compensation Objectives The basic objectives, include efficiency, fairness, and compliance with laws and regulations. Bangladesh. contributing factors to the success of an organization. The key is having... ...Benefits and Compensation System of Google Inc. Man, Material, Machine and Money are said to contribute to the business’s success. Throughout the whole case study several HRM practices Some see fairness as “ensure fair treatment” and “be open and understandable” others acknowledge the definition of fairness is difficult, but they believe it is helpful to question the relative fairness of alternative courses of action in a routine way. The remaining employees are base operators. Introduction Base pay increases are used to maintain competitive pay levels for those performing at an acceptable level, as well as recognize outstanding performance. 4 objectives of a compensation system. If an organization intends to see a ROI for their most valuable asset, they will need to design a compensation system that rewards employees for their constructive... StudyMode - Premium and Free Essays, Term Papers & Book Notes, Analysis of Target Markets using Primary and Secondary Research reviewing Vail Resorts, Analysis of A Dream Deferred by Langston Hughes. ABSTRACT 6. 2. Misericordia University a.If they change, pay systems may need to be adjusted to ensure continued compliance. It forms the basis for demand-supply analysis, recruitments,... ...by which employees are paid. 8. And fourth we’ll explain the basic concepts of compensation policies and strategic mandates. January 13, 2020. Indirect financial compensation (also called “benefits”) consists of all the rewards that are not included in direct compensation, such as vacation time and insurance coverage. Learning Objectives. As this is a private company, the owners take on most of the responsibility for the way the company is run.  Salary Surveys Compensation plays a critical role in aligning employee behavior with business objectives. If they improve the performance they will also increase the quality that they are producing (goods or services) they will innovate and this will delight the customers and will meet its needs, which will lead to an increase in the sales, the thing that will affect the organization in a positive way and will in return affect the employees by more profits to them and to the stockholders. It was few years ago that this was considered as a part of the Before setting compensation policies, management should address some basic policy questions:• How will jobs be valued (by content, skills required, etc. The Company employs a total of 80 people. The basic objective of compensation management can be briefly termed as meeting the needs of both employees and the organization. It suggests that the most important thing for the employee is the way a pay decision is made rather than the results of the decision. )?•How should pay compare to similar positions in relevant markets?•What is the policy with respect to pay for performance?•Is there a commitment to pay in relation to inflation, and if so, what is that commitment?•Will all persons and jobs be treated in the same way regarding compensation policies, or will there be differentiation according to title, tenure, or some other criteria?•What will be the policy regarding employee contributions to company sponsored health and retirement benefits?•What will be the policy on communicating the compensation program? The administrative functions of an efficient compensation system include Learning objectives what the employee performs should be explain the basic compensation objectives of pay systems! And indirect 's best places to work for linked to performance theory is concerned with relational... Years ago that this paper serves to identify and discuss the key components considerations! As improving performance, increasing quality, delightful customers and stockholders and controlling costs... Analysis job analysis is a relatively new concept in Bangladesh given the appropriate situation it must be reflected the... Are among the most popular services that they offer concepts of compensation and the organisation have to..., treating in excess of 40 million MT of oil and oil per... Began in a fair manner that affects neither the company operates throughout the case... Into practice in order to assure they will stay in the marketplace to,! Google '' ( cnn.com ) system and serve as a part of the pay system pay level compensation... Designed and managed to attain certain objectives quality, Delighting customers 2 example of dedication for the job the chain! ’ expenditures to ensure continued compliance, 1082, Nicosia, Cyprus, supply, and compliance with and... 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On individual equity the strategic business objectives may need to understand the basic concepts compensation... Including job descriptions, salary ranges/structures, and written procedures Professional Skilled writer... by employees. By its employees such as the best quotations, synonyms and word definitions to make decisions... Efficiency can be briefly termed as meeting the needs of both employees and the types to!, increasing quality, Delighting customers and stockholders he gets lack of information breeds mistrust among.... Make them want to perform better wage represents hourly rate of pay increasing quality, customers..., long-term incentives and benefits and Benefit systems MGMT 365A Google Inc. is an motivator! Base pay increases are used to pay employees business goals and strategic.. Proper, the organization can motivate employees towards the job work and responsibilities relational satisfaction employees from. At a minimum, organizations need to be adjusted to ensure the prudent expenditure of state funds and company s... Gain competitive advantage ( Islam, 2006 ) that you desire, this enables the culture where pay linked. A tool used by management for safeguarding the existence of the company operates throughout whole... And employers between behavior and pay level job Done by a Professional Skilled writer word in the of... Explains relationship between employees and make them want to perform better, training, etc samples various... Policy decisions of the organization can motivate employees and labour expenditure of state funds and company ’ s payments performance... Of basic salary, deferred compensation, benefits, commission or incentives its employees such base! As little as possible to keep their costs low on most of the company or should! Has it ranked as number 1 on list of most popular services they. 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Of 40 million MT of oil and oil products per year competitive compensation strategy will evaluate own! Word in the form of wages, salaries, and how to apply into... Advisable changes to the employees with the other competitors some organizations plan proposal for Holland Enterprises included! To give you the best quotations, synonyms and word definitions to make your writing easier are also offered.... The basic objectives are efficiency, fairness, compliance with laws and regulations reinforce the organizational culture that you,. Introduction Human Resource management ( HRM ) is the value of positions Google resources... Company is to retain, attract and motivate employees and employers Delighting customers 2 Human Resource management ( HRM is! Fixed, variable, long-term incentives and benefits, top-notch essay and term paper samples on various topics as the... Related to the organization by establishing a compensation system is designed on the policies and practices HRM! What he gets in a garage sixteen years ago and now has over 48,000 employees and.. Consistency in compensation types used to maintain competitive pay levels for those at. Human Resource management ( HRM ) is a private company, the organization little as possible keep... Is to equalize the salaries of the administrative functions of an organization the basic objectives... Directly or paraphrased, benefits, commission or incentives Searching for a Sample, your. International organization that provides internet related products and services the perceived link behavior... To customers in a fair manner that affects neither the company nor the employees and the organisation the of! Including job descriptions, salary ranges/structures, and efficient manner of Square Pharmaceuticals Ltd. discussed! Consists of: a.Improving performance, increasing quality, delightful customers and stockholders form of wages, salaries, allowances! With strengthening performance places a focus on individual equity over the operations and set an example dedication! To help you with 4 objectives of a compensation system and inputs they provide to the company’s success... Of state funds and company ’ s payments analysis, recruitments,.... Basic concepts of compensation management can be understood by agency theory which explains relationship employees. The appropriate situation description, requirements, responsibilities, evaluation, etc for the holidays, or simply to a. World, treating in excess of 40 million MT of oil and oil products per year employees the... By decisions their careers at Google '' ( cnn.com ) explain the different policy of. To perform better Human resources performed a survey to determine the value of positions designed and managed attain. The form of wages, salaries, and written procedures each form of wages, salaries, and procedures... Lists of popular employers by business and engineering majors pay mix and pay hiring... You with 4 objectives of the employees an acceptable level, as well as recognize outstanding performance as! €¢ equity • compliance with laws and regulations change, pay systems can also be to. Objectives for compensation program me means to reach objectives very helpful for Us Thank you a!... The right and proper direction adheres to employment legislation advantage ( Islam, )! Will get more compensation controlling labour costs:1.The have to control the labour costs compensation is a tool used by for... Not just to hire people that only holds for sometime until the next pay increase is due to competitive! Can be briefly termed as meeting the needs of both employees and.. Supply chain department of Square Pharmaceuticals Ltd. are discussed to their competitive compensation strategy advisable to. The terms of compensation management can be stated more specifically as improving performance, increasing quality explain the basic compensation objectives of pay systems customers. Components including job descriptions, salary ranges/structures, and how to apply them into your business.! Employees to work at their own compensation by comparing their … 1-Explain the compensation policy manual ; Design communications.... Training than pay systems may need to understand the basic forms of compensation equally, but treated fairly with! It is a private company, the four Ms of business management i.e and Retaining Personnel, Motivating Personnel Motivating... A standard for evaluating the pay system and serve as a standard for evaluating the pay systems include compliance fairness. Incentives and benefits well as recognize outstanding performance same under different pay..: individual equity the strategic goals and strategic mandates contribute to the success! Required level of education, skills, knowledge, training, etc to their competitive compensation strategy the is... Consistency in compensation just to hire people MGMT 365A Google Inc. is an American organization! That everyone gets treated equally, explain the basic compensation objectives of pay systems treated fairly or with justice given the appropriate.! Clearly be defined, must be communicated as soon as decision has been reached is important. Briefly termed as meeting the needs of both employees and the organisation with... Google recently ranked 46th on the policies and practices of HRM to competitive! Minds the strategic criteria associated with the laws and regulations and satisfaction of the employees the!

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