Discuss about nature, importance and objectives of compensation management

1. Nature, Importance And
Objectives Of CAPM
PRESENTED BY
A BALAJI
19331E0001

2. NATURE OF CAPM
The basic purpose of compensation management is to establish and maintain an equitable
reward system. The compensation management is concerned with the financial aspects of
needs, motivation and rewards. Managers, therefore, analyze and interpret the needs of their
employees so that reward can be individually designed to satisfy these needs. For it has been
rightly said that people do what they do to satisfy some need. Before they do anything, they
look for a reward or pay-off. The reward may be money or promotion, but more likely it will
be some pay-off-a smile, acceptance by a peer, receipt of information, a kind word of
recognition etc.,

3. IMPORTANCE
 It tries to give proper refund to the employees for their contributions to the organization.
 It discovers a positive control on the efficiency of employees and motivates them to
perform better and achieve the specific standards.
 It creates a base for happiness and satisfaction of the workforce that limits the labor
turnover and confers a stable organization.
 It is designed to abide with the various labor acts and thus does not result in conflicts
between the employee union and the management. This creates a peaceful relationship
between the employer and the employees.
 It stimulates an environment of morale, efficiency and cooperation among the workers
and ensures satisfaction to the workers.

4. OBJECTIVES
PRIMARY
Acquire Qualified Personnel: Compensation needs to be high enough to attract
applicants. Pay levels must respond to the supply and demand of workers in the labor
market since employees compare for workers.
Retain Current Employees: Employees may quit when compensation levels are not
competitive, resulting in higher turnover.
Ensure Equity: To retain and motivate employees, employee compensation must be fair.
Fairness requires wage and salary administration to be directed to achieving equity.
Compensation management strives for internal and external equity.

5. SECONDARY
 The compensation should be paid to each employee on the basis of their abilities and
training.
 It should motivate the employees towards increasing productivity.
 It should be capable of taking care of employees for safety and security needs also.
 It should be flexible and clear.
 It should not be excessive.
 Compensation should be decided by the management as per the norms fixed by the
legislations in consultation with the union.

6. THANK YOU