Meaning of Compensation Management. Compensation is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees.
Meaning of Compensation Management
According to Bangladesh Labor Act 2006-” Wages means all the remuneration expressed in terms of money or capable of being so expressed, which would, if in the terms of employment, expressed or implied, were fulfilled, be payable to a worker in respect of his employment or of work done in such employment, and includes any other additional remuneration of the nature a foreside which would be so payable…[Sec-2(XlV)]
Special Definition of ‘Wages’ Includes ( Sec. 120)-
- Any bonus or other additional remuneration
- Overtime, holiday or payment
- Any award or settlement amount
- Any sum payable at the time of termination of employment
- Any sum payable due to lay-off or suspension
Responsible Persons for payment of wages-
- Manager of the establishment
- Other people respond to the employer for supervision and control of the establishment
Employee Benefits Program
- Building employee morale and engagement
- Enhancing their Employment Value Proposition
- Becoming and remaining a Preferred Employer
- Reinforcing their Employment Brand
- Attracting quality employees
- Building employee loyalty and retaining key talent
- Increasing their employees’ disposable income
- Differentiating their employment offering
Objectives in compensation management
To help the organization achieve strategic success while ensuring internal and external equity.
Internal equity- ensures that more demanding positions or better-qualified people within the organization are paid more.
External equity – assures that jobs are fairly compensated in comparison with similar jobs in other firms.
- Acquire qualified personnel
- Retain current employees
- Control costs
Advantages of Fair Compensation System
- It will have a positive impact on the efficiency and results produced by employees.
- It will encourage the normal worker to perform better and achieve the standards fixed.
- It will be applied to all the levels of the organization as a general system.
- It will raise the morale, efficiency, and cooperation among the workers.
- Encouragement for those who perform better and opportunities for those who wish to excel.
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