Whoever exercises in an organization the administration of the remuneration system, whether his position is Human Resources Manager, Personnel Manager, Boss, Owner, Human Capital Manager or whatever, must take into account the following objectives when developing , maintain and improve the remuneration system (one that includes both direct and indirect remuneration).
The common objectives of any remuneration system will be:
• Acquisition of qualified personnel. Compensation must be high enough to attract applicants.
• Retain current employees. When compensation levels are not competitive, the rate of turnover (employee entry and exit) increases.
• Guarantee equality. Internal equality refers to the fact that the payment is related to the relative value of the positions; external equality means compensation analogous to other organizations.
• Encourage proper performance. The payment should reinforce the proper fulfillment of responsibilities.
• Control costs. A rational compensation program helps the organization obtain and retain the right people at the lowest costs.
• Comply with the legal provisions.
• Improve administrative efficiency. By meeting the other objectives, the human resources department achieves its administrative efficiency.