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The Components Of A Modern Compensation System

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a) What are the components of a modern compensation structure?
A compensation system intends to reward employees for the labor they put in (Hr-Guide, 2015). Compensation can be broadly divided into two groups; financial benefits and non-financial benefits. While salaries and wages are classified as financial benefits, health insurance, promotions and such are considered as non-financial returns.

In order to determine a fair reward system for the work done, the job or task assigned must be valued properly. The valuation should be consistent across all the employees within the organization so that they feel that the system is fair. For such an evaluation, numerous factors have to be considered. It can be achieved through Job Description, Job Analysis, Salary Survey and such. A modern system can include components such as:
• Basic Pay
• Housing and food allowances
• Overtime allowances/Service Charges
• Annual bonuses/Annual salary increments
• Stock options
• Non-monitory items such as health insurance, trainings, promotions, retirement benefits, regulations and such
Each option, regardless whether monetary or otherwise, should ensure that the compensation given is adequate and fair and anyone of the above alone cannot ensure a proper compensation. Monetary items were of much importance in early days. However, non-monetary benefits have become an integral part of many compensation schemes. Hence, it becomes a function of HR to ensure that the employees are treated equally and

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