Compensation management faces challenges in effectively managing pay. Forms of pay include cash, bonuses, and non-cash compensation which is difficult for employees to value but provides opportunities for creativity. Compensation programs must consider the value of all employee roles and use pay to reward and motivate performance. Technology allows for standardized, automated compensation systems that minimize errors and facilitate performance-based pay. Legal compliance and affordability are also important considerations for compensation programs.

2. INTRODUCTION
 Compensation management is more than
providing a paycheck and cost of living increases.
In many organizations, employee performance
relative to organizational goals serves as the basis
for compensation. Whether brought on by
economic difficulties, changes in technology or
other business factors, human resources
departments face challenges in effective
compensation management.

3. Challenges/Trends in
Compensation Management
FORMS OF PAY
 Employee pay begins with a cash base and
bonus pay, but may also contain non-cash
forms of compensation. The valuation of
non-cash compensation is often most
difficult for employees to appreciate, but it
offers the most opportunity for creativity on
the part of the organization

4. Challenges/Trends in
Compensation Management
UNDERLYING PAY PHILOSOPHY
 “All organizations pay according to some
underlying philosophy about jobs and the people
who do them”, says KP Kanchana, a professor at
CFAI National College in Bhopal, India.
Compensation programs must consider and value
the work of those who provide internal support to
the organization as well as those who directly
impact financial results.

5. Challenges/Trends in
Compensation Management
EMPLOYEE INCENTIVES AND
COMPENSATION
Pay-for-performance has become
increasingly popular. Companies use
compensation to reward and boost the
morale of high-performing employees,
but also to motivate underachievers

6. Challenges/Trends in
Compensation Management
 PRESENTATION OF COMPENSATION
 How a HR manager speaks regarding pay can
inadvertently create ill will when the intention was
to deliver good news. It is important to use
specifics when speaking with employees rather
than categorize any pay increase as “good”,
“significant” or some other qualifier. Employee
perceptions of compensation are based on
individual values, needs and expectations

7. Challenges/Trends in
Compensation Management
OFFERING COMPETITIVE PAY
Businesses wishing to compete for the
best of the available talent pool must
offer a competitive compensation
program compared to other companies
within their industry and at large

8. Challenges/Trends in
Compensation Management
 AUTOMATION AND OUTSOURCING
 Automating compensation, including outsourcing
some compensation functions, enables businesses to
standardize its system throughout the organization,
eliminate paperwork and help departments to
communicate more effectively. It minimizes payroll
errors and makes it easier to compensate performance
based on quantifiable measures. Organizations may
also use technology to benchmark jobs and survey
employees.

9. Challenges/Trends in
Compensation Management
 GENERATIONAL DIFFERENCES IN EXPECTATIONS
 People are living longer, and thus, working longer.
In a look at physician compensation, Max Reibolt
of The Coker Group noted a difference in work
ethic and expected compensation that fell along
generational lines. Older workers were more likely
to work longer hours in exchange for their pay
while younger workers expected high levels of pay
even when their productivity was aided by
technology

10. Challenges/Trends in
Compensation Management
MULTINATIONAL BUSINESS OPERATIONS
Multinational corporations must
balance the needs and expectations of
employees from various countries.
Compensation must balance
conformity with local laws and customs
against global corporate policies.

11. Challenges/Trends in
Compensation Management
 CONTROLLING LABOR COSTS
 Labor costs often constitute the largest line in a
corporation’s budget. In a tight economy,
companies are faced with a flat, if not shrinking,
pool of funds. The cost of labor is broader than the
amount paid to employees, taking into account
recruitment, training, turnover, infrastructure and
overhead, and the impact of these things on
productivity

12. Challenges/Trends in
Compensation Management
 Legal Compliance Issues
 Legal considerations are also on the mind of HR
professionals who manage compensation programs. In
addition to being competitive with the external
market, pay must be equitable internally within the
organization
 However, small businesses must be careful not to
violate discrimination laws, improperly set up benefits
packages such as retirement or health insurance
contributions or avoid overtime pay requirements.

13. Challenges/Trends in
Compensation Management
 Recognizing and Rewarding Employees
 HR professionals design programs to successfully
motivate employees to perform at their best and
that recognize and reward employees for their
contributions in a way that's affordable to the
company. These programs are critical for
maintaining employee retention according to
the Society of Human Resource Management.

14. THANK YOU