By

‘Yinka Akinnubi

Compensation is a systematic approach to providing monetary

value to employee in exchange for the work performed.

It refer to the methods of maintaining balance between

interests of company & attracting, developing, retaining and

rewarding employees through wages and salaries.

Compensation includes all forms of direct wages, salaries,

incentives, commissions and bonuses given to the workforce of

an organization.

Compensation management is one of the key activity that

support workforce performance and talent management

process.

Definition

Compensation is one of the main function of the human resource

management (HRM) functions. Compensation is an integral

part of human resource management which helps in motivating

the employees and improving organizational effectiveness

The below terms are usually linked with compensation

management in an organization:-

Equity

Motivation

Employee Appraisal

Background

To design pay systems that elicit desired behaviors by employee at work

To motivate employee to join, stay and perform at their highest potential

For organization to maintain competitive edge and retain high performing employees.

For the organization to remain ethical and legal in its compensation programs

.

Objectives

.

Benefits

Recruit and retain qualified employees

Increase or maintain morale/satisfaction

Reward and encourage peak performance

Achieve internal and external equity

Reduce turnover and encourage organization

loyalty

.

Components

Salary Survey

Job Analysis

- Job Evaluation

- Job Description

Pay Structure

Policies & Regulations

.

Limited alignment between pay and performance.

Absence of an integrated process for all aspect of compensation

management.

Lack of integration of compensation and talent management

applications.

.

Challenges

Transition from the piecemeal compensation

approach to total rewards compensation system.

Use of variable pay and benefits scheme.

Compensation is gradually been draw based on

competency/performance compared to the

traditional compensation system.

Trends

The role of compensation in employee motivation and workforce

performance is critical, below are some of the key business

opportunities that consulting firms can provide to other organization

viz-a-viz :-

Advisory Services

A sustainable compensation management are important to motivate the

employees to increase their organizational productivity.

An effective compensation management helps in making an organization

accomplishing its goals much faster and seamless.

Salary is just a part of the compensation system, the employees have other

psychological and self-actualization needs to fulfill. Thus, a compensation

management system serves many purposes.

The most competitive compensation will help the organization to attract and sustain

the best talent. The compensation package should be as per industry standards

Conclusion

I consider myself a Human Resource Generalist with extensive knowledge of organizational

restructuring, employee management/engagements, and other gamut of HR functions.

An enthusiastic and dedicated individual, with high intellectual curiosity and a non-sticker for

status quo, an outstanding performer who takes prides in it works.

My careers expertise revolves around key industries including Banking, Media & Publishing,

Consultancy etc.

I am a certified Human Resource Business Professional, with Society for Human Resource

Management, Virgina USA, and an associate member of the Chartered Institute of Personnel

Management, Nigeria.

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