Compensation is the methods and practices of maintaining
balance between interests of operating the company within the fiscal budget and
attracting, developing, retaining, and rewarding high quality staff through
wages and salaries. Gary Dessler in his book Human Resource Management defines
compensation in these words "Employee compensation refers to all forms of
pay going to employees and arising from their employment."
Actually,
worker’s compensation plan was voluntary for businesses. There are several
strategies of compensation that may be affecting on the business:
Ø Improved
employee morale and retention
Ø Increased
employee engagement and productivity
Ø Strengthened
governance and compliance with company vision and mission
Compensation
divided to two categories which is fixed and variable compensation. The fixed compensation
like is bonuses, pay wage, merit pay/cost of living adjustment and equity
adjustments. While, the variable compensation is like individual incentives
plan, group incentives plan, profit sharing plan and productivity gain sharing
programs.
Within using a HRIS application in
compensation and planning, it can help to centralized the database with provide
small to mid-sized companies access to the technology and expertise to solve
the administrative problems regarding with benefits and compensation
information. Other than that, it’s also provides a system for organizations to
administer and track employee participation in benefit and planning program.
It’s including insurance, compensation, profit sharing and retirement.
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| The Basic of Compensation System
The employer that provides the
compensation and planning in their organization can give more advantages
whether to the company or employees. Compensation and planning can make
employees more peace in mind. It’s because, when organization offering insurance
to the employees, they will relieves from certain fears. As a result, the
employees can work with relaxed mind. This matter also can increase confident
level among the employees. As a general, every people want their effort to get
acknowledgement. Employees can gain more confidence and abilities if they receive
appreciate like rewards. As a result also, the employee’s performance will more
increase.
Meanwhile for the organization, it
can produce low absenteeism among employees. When they enjoy with the office
environment and happy with their salaries, they will be more diligent to coming
work every day. Compensation also can make low turnover to the organization.
It’s because, if organization offer and provide with fair awards, employees
will more commitment to stay with their organization. In addition, it will
contribute a job satisfaction among employees. They will happier by doing their
jobs if they get rewards as a result from their services.
References:
1. J. Kavanagh, Thite and D.
Johnson (2012), Human Resource Information System: Basics, Applications,
and Future Directions. 2nd Edition.
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