Role of compensation in organisation

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Role of Compensation in Organisation

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Role of compensation in organisation

  1. 1. Role of Compensation in Organisation Dr. G C Mohanta, BE, MSc(Engg), MBA, PhD(Mgt) Professor Al-Qurmoshi Institute of Business Management Hyderabad
  2. 2. Role of Compensation in Organisation  To attract capable employees to the organization  To motivate them toward superior performance  To retain their services over an extended period of time  To establish a positive corporate reputation  To increase or maintain morale/satisfaction  To achieve internal and external equity  To reduce turnover and encourage company loyalty
  3. 3. Role of Compensation in Organisation (Contd.)  Compensation plays a very important role in attracting the best talent in the organization, as well as, retaining them for a long time.  It helps in creating a solid human resource base in the organization which enhances the productivity, efficiency and overall quality in the organization.  A sound human resource infrastructure with employees possessing proper set of skills for right job, is critical to the success of any organization and  It is perfectly achieved via a suitable compensation plan
  4. 4. Role of Compensation in Organisation (Contd.)  In order to avoid high attrition levels, compensation plays a key role in retaining the top talent in the organization.  To maintain high standards of productivity and service, the organization must motivate employees.  A suitable compensation, incentives and rewards program is the key motivator in any organization today.  In order to motivate employees and boost their morale to achieve desired performance levels and goals, compensation plays a key role  In order to achieve more incentives and compensation, employees raise their performance levels.
  5. 5. Role of Compensation in Organisation (Contd.)  In the absence of appropriate compensation plans, employees will not be motivated to perform efficiently and will always look for changing the current organization.  Organizations should reward employees for their specific contributions to the achievement of the organizational goals and objectives.  In today’s dynamic business environment where innovation and efficiency is the key, compensation is a crucial tool to reward the best performing employees for their important role in success of the organisation.
  6. 6. Role of Compensation in Organisation (Contd.)  If there is an appropriate compensation system, it will encourage normal worker to perform better & achieve the standards fixed.  It would not penalize the workers for the reasons beyond their control and would not result in exploitation of workers.  It will raise the morale, efficiency and cooperation among the workers.  It would embody itself the principle of equal work & equal wages and would provide satisfaction to the workers.  It would help management in complying with various labour acts  It would bring amicable settlement of disputes between the workers’ union and management.  It would provide encouragement for those who perform better and opportunities for those who wish to excel.

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