Employee Compensation: Human Resource Management Case Study

1.3.3 Compensation – Employee compensation is a vital part of Human Resource Management. Compensation and benefits or rewards are concerned with paying workers and administering their benefits package. Many factors, such as relative worth of the job. Dimension of skills, job responsibility, market conditions, position of labour supply in the market, global economic environment, legal aspects, internal financial and liquidity position of the company, etc. are taken into consideration to determine the salary & wages.

Employee compensation, therefore, influences vitally the growth & profitability of the organization. That’s why, organizations design their compensation structure on the basis of various objectives. Firstly, organizations try to

The managements are constantly looking for the low cost products for their employees such as health insurance, while concurrently maintaining or improving quality outsourcing for other facilities, flexi benefits programme and utilization review to help the organisations to cost cuts or cost reductions. Inherently flawed incentive compensation practices in the financial sector were one of the important factors contributing to the recent global financial crisis. High short-term profits led to generous bonus payments to employees without adequate regard to the longer term risks they imposed on their firms. These perverse incentives amplified the excessive risk-taking that severely threatened the global financial system and left firms with fewer resources to absorb losses as risks materialized. The lack of attention to risk also contributed to the large, in some cases extreme absolute level of compensation in the industry. The rewards management set-ups also serve as facilitator for providing its employees crucial information such as pay cuts options, recent tax law changes, details of perquisites attached to various jobs at different levels. This provides the work force a great deal of responsibility and sharing a long-term vision of the undertaking with its employees.

As Compensation Management is a complex, non- transactional process which

Amah (2009) stressed that job satisfaction was found to have a direct negative relationship with turnover intention. These results indicate that the effect of job satisfaction on turnover can be enhanced in two ways; namely, when employees find congruence between their job and their self-identity, and when involvement in such jobs enhances their overall life satisfaction. On the other hand, turnover can be considered as cost of running a business.44 In words of Cranny, Smith and Stone (1992) job satisfaction is a combination of cognitive to what he or she actually receives. Job satisfaction is a factor that would induce the employee to work in the long term position. Regardless of job satisfaction the organization or firm would confront with the cost and affective reactions to the differential perceptions of what an employee wants to receive compared of recruitment caused by turnover. For this reason, the organization should pay attention to employees’ job satisfaction as