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Essay / Compensation Essay - 795
Job satisfaction includes challenging work, interesting assignments, fair rewards, competent supervision, and rewarding careers. The quality of work life and the psychological rewards of employment are very important. It is doubtful, however, that many of us would continue to work without the money we earn. This document establishes the definition of compensation, an overview of compensation philosophy, the essential elements of a compensation strategy, and an example of effective compensation practice. (www.indiana.edu/~busx420/Book.../chap09.doc)Compensation is the compensation received by an employee in exchange for their contribution to the organization. It is an organized practice involving the provision of monetary and non-monetary benefits to employees (citehr.com). Employee compensation includes all forms of remuneration and rewards received by employees for performing their jobs. Direct compensation includes employee wages and salaries, incentives, bonuses and commissions. Indirect compensation includes the many benefits offered by employers, and non-financial compensation includes employee recognition programs, rewarding jobs, and flexible work schedules to meet personal needs (www.indiana.edu/~busx420/Book .../chap09.doc). Formalized compensation objectives serve as guidelines for managers to ensure that salary and social policies achieve their objective. The most common objectives of compensation policy include rewarding employees' past performance, remaining competitive in the job market, maintaining pay equity among employees, motivating future employee performance, maintaining the budget, attract new employees and reduce unnecessary turnover. It is important for the body...... middle of paper ......e carried out annually, often in conjunction with performance reviews. Bonuses and incentive pay are used by many for-profit companies and are not typical elements of nonprofit organizations. remuneration policies. As with base salary and salary increases, decision-making criteria should be established and communicated for the awarding of bonuses and incentive payments. Typically, this type of compensation is tied to specific performance outcomes against predefined goals and objectives at the individual and organizational level. http://hrcouncil.ca/hr-toolkit/compensation.cfm Establishing compensation practices requires consideration of specific goals, such as employee retention, compensation distribution and budget analysis. Organizations must balance each of these goals and remain competitive in order to motivate employees and maintain fairness in the compensation program..