Compensation is the amount paid to employees in exchange for the services they provide.
It includes Base salary, Allowances, Variable Pay incentives and/or commission, bonus, profit sharing, monetary and non-monetary perquisites( Car , Company Accommodation, Meal Vouchers, Laptop , Mobile etc), benefits like insurances (Medical , Life, Accident, Disablement), Leave Policy and Retirement benefits.
Developing a compensation strategy is an essential activity for all companies,
- Affordable for the company
- Competitive enough to attracts and retains quality people
- It should be motivating for the employee
- Aligned with organizational strategy
- Achieve job equity
- Reduce Turnover
A effective compensation strategy can be developed through Job Analysis, Job Evaluation, Competitor Mapping, Salary Surveys etc.