What are the objectives of compensation management?

The objectives of compensation management are to attract, engage, and retain employees through competitive compensation plans that align with the company budget, corresponding job-market, and government regulations.
Good compensation management should:

  • Attract and recruit talent
  • Motivate employees
  • Maintain morale
  • Adhere to government regulations and company compensation philosophy philosophy
  • Reflect the current job-market

Compensation management can achieve its objectives by offering:

  • Attractive salaries
  • Useful benefits
  • Bonuses, incentives, and programs to improve employee wellbeing
  • Retirement savings
  • Insurance

Why should HR leaders care about the objectives of compensation management?

HR leaders play a pivotal role in building compensation plans which fit the needs and desires of employees and align with the company vision. Maintaining excellent employee compensation can lead to an increase in:

Companies that offer competitive and life-enhancing compensation can raise motivation in the workplace and improve work performance, which ultimately leads to greater company success.

What can HR leaders do to ensure that the objectives of compensation management are achieved?

HR leaders can support effective compensation packages by collaborating with managers to build an inclusive compensation program that addresses employee needs and the fluid job- market.   

  • Develop and apply a compensation philosophy. A compensation philosophy formally documents the company reasoning behind employee salaries, bonuses, and benefits. Consistently adhering to the compensation philosophy demonstrates company integrity and transparency to employees and job candidates.
  • Gather employee feedback. Employees can provide the most accurate feedback regarding compensation plans. HR leaders can conduct anonymous surveys, allowing employees to relay their honest opinions and suggestions. Before conducting the survey HR leaders can explain why they will be running a survey– because employee opinions and experience are invaluable and their job-satisfaction matters.
  • Follow through with employee feedback. HR leaders and compensation management can implement changes based on employee feedback. While there are numerous aspects to consider when building compensation plans, adjusting compensation plans to address employees’ financial and lifestyle needs can lead to greater retention and engagement.
  • Explain the compensation plan to employees. Perhaps employees receive competitive compensation packages, yet they aren’t aware of how to access their benefits. HR leaders can review compensation plans with managers, who in turn can clarify the plans to their team members. This helps employees appreciate and benefit from every aspect of the compensation package.
  • Offer compensation to improve quality of life. In addition to base pay, compensation can include life-enhancing benefits, such as a pleasant work setting, a workplace wellness program, extra vacation days, or daily fresh catering.

How can achieving the objectives of compensation management improve company culture?

Attracting, retaining, and engaging employees through a comprehensive compensation program is integral to building a thriving company culture. Compensation packages that provide market range salaries and address employee well-being demonstrates a company’s value for its employees. Employees who receive such all-inclusive compensation are bound to contribute positive energy and a good attitude to the company culture.