Question

Designing Compensation Systems

When designing a compensation system for an organization, it is important to have a compensation philosophy which serves as a framework for making decisions about various components of the system.

Tasks:

One question to be addressed is how can your compensation program help the organization be successful (e.g., be able to attract and retain talented workers needed to be competitive in the marketplace)?

Answer 1

For any employee-compensation program to be successful , in the long-run, must be beneficial to both the employer & the employee, genuine and growth-oriented, moderate & cost-effective.

1.In drawing up the program, the company goals & objectives must be inter-woven with the welfare of the employees , so that the company is not financially burdened at any stage & liberal in its sanctioning of perquisites to the deserving.

2..Representatives of the employees can be involved in the process and taken into confidence, so that their side of view is fully appreciated and also they do not feel left out ,in a major policy -draft.

3..Weightage should be given to the right qualifications & right amount of special skills of different employees ,so that they see job-satisfaction & growth in their roles with the company.

4.. Compensation to be effective must be performance- oriented,ie. Providing opportunities to earn more for those employees who are in a position to put in extra efforts.

5.. At the same time, packages should definitely be humane & reachable to most of the employees & should not be very demanding ,leaving very less time with family & friends.

6.. Compensation offered must be in line with what is available with the industry peers , and in a way, a liitle ahead ,atleast ,in variety of support services offered --like creche care for children of women employees,permission to parents to attend their childerns' first day in school or the parent-teacher meetings.

7..ie. The compensation need not only be in money terms---it can also be in th etypes of facilities offered --that make the employees comfortable ,even when they are away from home for most part of the workings hours in a week.

8. A good compensation package, even though moderate, is a sustainable one--that makes the company grow with satisfied work-force --& that which is sure to make them think a ton times before quitting --- and in that reduces the employee-turnover --which in-turn reduces heavy amounts spent in repeated recruitment processes.