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Role of Compensation in
Organisation
Dr. G C Mohanta, BE, MSc(Engg), MBA, PhD(Mgt)
Professor
Al-Qurmoshi Institute of Business Management
Hyderabad
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
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
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.
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.
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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Role of compensation in organisation

  • 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. 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. 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. 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. 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. 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.