What is compensation management?
Compensation management is the process of managing analyzing and determining the salary, incentives, and benefits each employee receives.
Compensation managers aim to attract, retain, and engage employees by offering broad and competitive compensation plans within the company budget.
A good onboarding process is reminiscent of boarding a plane. At the beginning of an adventure, you’re greeted by someone who’s happy to have you. They help you find your seat and get acclimated so the flight will be comfortable and you’ll get to your destination safely.
Though remote onboarding takes place virtually, the process is inherently the same as face-to-face onboarding.
Compensation management ensures that employees get paid a fair salary based on:
- Work performance
- Job market
- Company budget
Why should HR leaders care about compensation management?
Effective compensation management benefits both the employer and the employee. Employees who receive a fair base salary, generous benefits, and incentives in return for their work are much more likely to stay at their job, maintain a high work performance, and morale.
Effective compensation management fuels employee engagement and thereby leads to company success.
What can HR leaders do to ensure effective compensation management?
HR leaders can guide compensation management towards building and implementing successful compensation plans with these methods:
- Develop and apply a compensation philosophy. A compensation philosophy formally documents the company policies regarding employee salaries, bonuses, and benefits, as well as shows and transparency. Consistently adhering to a compensation philosophy demonstrates company integrity to employees and job candidates.
- Explain the compensation plan. HR can clarify the components of the compensation plan to candidates and new employees, helping to attract top-notch candidates and retain employees.
- Design a robust compensation strategy. HR leaders can collaborate with managers and specialists to offer all-inclusive compensation plans as well as generous benefits to improve employees’ quality of life.
- Assess the results. It’s always helpful to learn from experience. HR leaders can analyze the results of compensation management to see what is working, and what isn’t through a compensation scorecard, which can improve the efficacy of compensation management.
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How can effective compensation management improve company culture?
Compensation management which ensures the financial success and wellbeing of both the employer and employee makes both happy. Employers who reward employees with market-range salaries, well-deserved bonuses, and incentives to improve employee lifestyle, demonstrate their value for their employees. As a result, the employees will feel more motivated and engaged, and in turn, give back to their employer through increased productivity and quality work. This symbiotic relationship between employer and employer is vital to create a company culture composed of happy and enthusiastic employees.