2. COMPENSATION:
The term compensation basically refers to all
financial returns and tangible benefits that
employees receive as part of an employment
relationship.
The challenge in compensation lies in the
balancing act that has to be done in the interest
of the employee and the employer.
For the employees, pay is one of the most
important element that drive, motivate,
compensate and reward them for the work they
do.
3. Compensation management:
Compensation management is the
practice of the organisation that
involves giving monetary as well as
non-monetary rewards to the
employees, in order to compensate
for the time they allocate to their job.
4. BASES OF COMPENSATION
Compensation is not only a means of
compensating the employee for the service
rendered – it also serves as a tool in the
hands of the organisation to attract the best
and also to enhance their performance,
reward them and retain them.
5. KINDS OF COMPENSATION
Many studies have brought forth the fact
that money is not the only form of
compensation that employees expect from a
job. Based on this fact the compensation
can be classified to be of two kinds. They
are,
1. Financial compensation:
financial compensation can be of two types
6. a) Direct financial compensation:
It consists of the pay that person receives in
the form of wages, salaries, commissions,
incentives and bonus.
b) Indirect financial compensation:
these are benefits that consist of rewards that
are not include in direct financial
compensation. This form of compensation
includes a wide variety of rewards and benefits
received indirectly by the employee. An
example is the contribution that the company
makes to an employee’s housing subsidy or a
pension plan.
7. 2. Non- financial compensation:
Non-financial compensation consists of
the satisfaction that a person gets from the
job itself or from the physical and
psychological environment in which the
person works. For example, employees
can get great satisfaction from their work
and enjoy the environment which they
work in.
