Compensation management is vital for employee motivation. It shouldn’t be exclusive to large corporations. Everyone should be recognized for the value they bring to organizational success; not just those in companies with 1,000s of employees, and millions of dollars a year in salaries.
For many reasons, effective and fair compensation management is a must for every business. Employees who are recognized for the value they bring are more likely to be motivated, loyal and higher performing than those who’re not.
There are different ways that management and HR department can communicate appreciation. However, it’s important than compensation management policies are in place. Policies that make it clear exactly what the employee is receiving in total reward.
Compensation management refers to many things, but is defined as “the act of distributing some type of monetary value to an employee for their work by means of the company’s policy or procedures”.
Simply put, compensation is the paycheck plus any benefits that come with the position. Compensation management is without question, 100 percent critical in the search for and retention of great employees. A great pay package is a serious incentive to not only take a job, but to excel at it.
Everything! OK, maybe not everything. However, the success of the HR Department in any company relies heavily on positive employee communication. Ineffective and negative employee experiences will weaken any company.
The way HR handles employee relations tends to have a major effect on global moral. This is especially so when dealing with sensitive personnel matters. It’s not always a walk in the park either. The HR department tends to have the biggest direct impact on the employees of any company, large or small.
HR is responsible, among many other challenges, for hiring, firing, moral, payroll and benefits. There is nothing that impacts employees more than these five matters. To the contrary, there is perhaps nothing more motivating for employees than compensation. It recognizes them and reinforces positive feedback through tangible pay raises and perks.
Compensation management also helps you be sure that the salaries you offer are competitive. If all the data you’ve collected is on track with market trend, hiring managers will be able to make an offer to a prospective candidate without low-balling or going way too high.
Since employees will undoubtedly have access to their co-workers salaries, either online or through word of mouth, it’s important to keep all compensation management practices fair and on trend. Raises and bonuses can be calculated this way as well. This said, there are critical arguments that denounce basing future employee worth on past performance.
Overall, if your compensation management system is correctly projecting salaries, raises, bonuses, discounts and other perks, then employee retention will stay steady. Happy employees stay put.
In order to run your compensation management program without taking blind guesses or incomplete information found on Google, you need a compensation management software program.
Compensation management software is exactly as it sounds. It’s an enterprise application that is used to calculate, budget, and maintain employee salaries. Additionally. it will provide the information you need to know about how salary can change within an existing job role.
However, it’s important not to count out employee potential when calculating salaries. Compensation management software is extremely reliable, but it’s important to make it work within the morals of your company.
Compensation management systems tend to be operated by HR. They can be set-up to be accessed by department heads and managers as well. Often, compensation management stats are accompanied by employee performance data. The combination of the two will help determine offers, bonuses and yearly raises.
Benefits play a major role in the decision to accept or pass on a job offer. Employers should consider great employee benefits as part of their compensation management program.
While healthcare differs greatly from country to country, making benefits part of your compensation management plan can help employees stay healthy. The software you invest in should help you keep up-to-date with popular wellness incentives in the workforce.
Whatever benefits you offer to your employees, these can be tracked and compared to market changes within a compensation management system. Since benefits play such a huge role in employee well-being, it’s vital for them to make a positive impact.
Compensation management software can also help you to encourage employees to take part in a journey to wellness, which has the potential to lower healthcare costs all around.
There is a huge difference between compensation management and payroll.
Payroll is the preparation of worksheets and checks and will subtract income taxes and other deductions. Payroll can also be used to keep track of salaries, payouts, wages and budgeting within a company. Payroll is a huge cost to most companies, so stellar records are a must have.
Compensation, on the other hand, refers to all pay types (salary included) and benefits that are provided to an employee by an employer. Life insurance, disability insurance, health and dental, and retirement funds are all part of compensation.
Most employers cover a portion of health insurance premiums, and help employees build their retirement fund. These are two wonderful ways to boost employee retention.
The size of your business might not matter, but your approach to compensation management does. Smart compensation policies are proven to help businesses expand. This is because they help with the acquisition and retention of quality, hardworking, motivated employees.
In fact, compensation management is one of the most effective ways to keep employees happy and focused on achieving personal and business goals. Employers of any size should want to keep and maintain this goal-oriented attitude from the employees that work for them.
Rome wasn’t built in a day, and the same can be said for every business in existence. With proper planning, practices and compensation management, companies can skyrocket to success within a few short years.
If you think your compensation package needs review, there is no better time than now to do it. Success is waiting.
We’d like to thank Jennifer Bennet of Taylor Benefits Insurance Agency, for this contributed blog.