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When you are setting wages for your employees there are many

factors to consider. Their compensation should be determined by more

than just whether they can work for you or not.

You need to make sure that you are considering what compensation

factors will affect those that work for you. You have to remember that

employees are going to go where it is going to benefit them most. That

means that you need to be able to make a good offer if you want them

to work for you.

Here are a few ideas for compensation factors to consider. For each

business there will be different applications, so not all of them are

right for your business.

• What type of business you have. f you are a retail

store then commission will work great, but if you are a

production company then sales won!t affect many of your

workers. The different departments and divisions within the

business will make a difference too. The waitresses will be able

to collect tips but the cooks aren!t out with the customers to be

tipped.

• The list of responsibilities and duties that are expected of

the employee. "t the bottom of the food chain there will be less

responsibility, if the person that just got hired is making the

same as the supervisor over them, but the responsibilities are

different, you might find you have some upset supervisors. "s

their job re#uirements increase there should be more

compensation given.

• The time and effort that is put into the job. You will find that

some employees have a drive to do everything they can to give

it their best. $thers will be more inclined to take the minimum

workload and be done with work the second the clock tells them

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it is okay. For those employees that volunteer to do more and

that give a great effort, there should be more compensation. f

you are looking for committee members to put together a

presentation, give them e%tra pay for the time they put into it.

• On that same note, you will find that some people are

picking up the slack from those that are just there to do

the least they can. For those that are taking on e%tra and

doing all they can to make up for those that don!t care, there

should be a reward. They should be recogni&ed for their efforts

and compensated likewise.

• When an employee is hired look at their education. f they

have an accounting degree and you are looking for a financial

adviser or an accountant, then you should be willing pay a little

more for their knowledge. You will have applicants that come in

under and over #ualified, make sure that you have enough

compensation budgeted that you can hire the person with the

right knowledge for your company.

• Look at their work history. f they have years of e%perience,

they should be compensated. Those years help you to have that

much more of an advantage, adding their education to their

e%perience you may have someone that can make a big

difference in your company. "lso, if you are hiring even for the

smallest job, then you need to know that they are going to be

with you for at least a good amount of time. t is e%pensive to

train, so if you can reward them for being at their past jobs for

an e%tended amount of time then you might find a loyal

employee.

'emember that happy employees are the only way to keep a business

running in the right direction.

(orporate business strategy)(orporate H'* strategy

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)+emand and upply of human talent)$rgani&ation values

)*arket 'ates)ndustry Trends

)-erformance 'elated)Fle%ibility responding to changes.

)*otivation oriented)Work related)-roductivity based

)/udget factor

)(ompetence based)(ontribution factor

)$rgani&ation grade structure)0ob evaluation 1 relative si&e of jobs 2

)3on financial benefits)4mployee benefits.

)nternal job value.)4%ternal job value.

)-erceived value of an employee at a given time.

)"ffordability.)Trade 5nion factor.

-erformance appraisal system 6 (omponents of performance appraisal systems aredirectly related with reward system. -ermonace appraisal system is not only a direct

projector of performance by an individual during the year but accounts for so manyother parameters such as 7eadership 8ualities

(ommunication-ersonal "ppearance9 Ways of +ressing up:

"bsenteeismHealth concisiousness

'elationship with pears.

ystem adoption and understanding the systems.elf *otivation.

You can highlight combination of above parameters with individual performance andevolve a system of rewarding the employee. " self motivated employee with good

personal "ppearance and low absenteeism rate can be rewarded for theseparameters.

;.(ompany commitment 6 You make number of combinations but if managementcommitment is not there , then innovative systems will never come into e%istence. n

fact it is commitment of company management to promote innovative ways. Theseways are to be critically evaluated before implementation. /usiness simulations if

available may be tried to work out the nearest possible results. W$T analysis isre#uired to be done very carefully to visuali&e the impact of reward. For real good

innovation again if commitment to promote the same is there only thenimplementation will succeed else results may differ.

<. *inimising the /ias factor 6 /ias factor is a stigma on innovative practices. You cannot eliminate this but by minimising the bias factor , one can achieve the objective of 

innovative system.

=. "vailability of resources 6 For implementation of any system one has to have

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resources for the same. e.g you want to pay 's.>???.?? as one time reward to anemployee for his low "bsenteeism rate, you should have resources to pay that. f

resources are not available the morale which you want to improve will not be asmuch possible as you desire to be.

Internal

Corporate philosophy

Corporate missionBusiness strategy

Human resources philosophy and strategy

Total rewards philosophy and strategy

Corporate cultureShareholder expectations

Corporate structure

Costs/resource availability 

External

Community culture

CompetitionEconomics

Industry characteristics

Labor maretLegal/regulatory

Technology

!lobali"ation