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COMPENSATION MANAGEMENT (Objectives of Total Compensation Management…
COMPENSATION MANAGEMENT
Definition
Total Compensation Management
It refers to all kinds of financial and non-financial returns, tangible services and benefits that employees receive as part of an employment relationship
Reward will be in the form of both intrinsic and extrinsic compensation
Total Compensation System
It is a comprehensive system that enables the administration of employees compensation and benefits programmes
Direct Financial Compensation
The pay that an employee receives in the form of wages, salaries, commissions and bonuses
Can also be considered as incentives that are performance-based such as individual, group or team and company-wide (organisational)
Benefits of Total Compensation System
Reduce Employee Turnover
Increase Morale and Efficiency of Employee
Boost Employee Engagement
Motivation for Employees
Attract Talent
Components of Total Compensation System
Financial
Direct
Wage/Salary
Commission
Bonus
Indirect
Legally Required Benefits
Voluntary Benefits
Non-Financial
Job
Job Environment
Workplace Flexibility
Objectives of Total Compensation Management
Positive reinforcement
Enhance company reputation
Makes a company vigilant
Retain current employees
Ensure equity
Reward desired behaviours
Control costs
Comply with legal requirements
Facilitate understanding
Acquire qualified personnel