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COMPENSATION MANAGEMENT Chapter 1

This document provides an overview of compensation management. It begins by discussing why compensation matters in terms of financial stability, curiosity, competitiveness, economic impact, social equity, talent attraction and retention, and motivation. It then defines compensation from different perspectives and discusses its forms. The rest of the document outlines a pay model and global views of compensation. It notes compensation encompasses financial and non-financial rewards received in exchange for work.

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kamaruljamil4
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38 views

COMPENSATION MANAGEMENT Chapter 1

This document provides an overview of compensation management. It begins by discussing why compensation matters in terms of financial stability, curiosity, competitiveness, economic impact, social equity, talent attraction and retention, and motivation. It then defines compensation from different perspectives and discusses its forms. The rest of the document outlines a pay model and global views of compensation. It notes compensation encompasses financial and non-financial rewards received in exchange for work.

Uploaded by

kamaruljamil4
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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COMPENSATION

MANAGEMENT
Chapter One
DR NUR KAMARUL HAFIZ

FACULTY OF BUSINESS AND ACCOUNTANCY

LINCOLN UNIVERSITY COLLEGE


Subtopics:
The Pay Model

❖Compensation: Does it Matter?

❖Compensation: Definition

❖Forms of Pay

❖A Pay Model
Compensation: Does it matter?
Why should you care about compensate on?

1. Financial stability –
➢ how much money coming in as going out ensures financial stability for individuals and their families.
➢ Maintaining a comfortable lifestyle and planning for the future.

2. Curiosity and understanding –


➢ Curios about how compensation systems work, especially when it comes to the pay of celebrities, executives, and hourly workers.

3. Competitiveness -
➢ High labour costs without corresponding advantages in efficiency, quality, and customer service can disadvantage a company like
General Motor, leading to bankruptcy and job losses.

4. Economic impact–
➢ The compensation practices of larger companies can have a significant impact on the economy, affecting jobs, communities, and
the taxpayers.
Compensation: Does it matter?
5. Social equity –
➢The disparity in compensation between different types of workers (e.g. CEOs vs. Hourly workers) raises
questions about fairness and social equity

6. Talent attraction and retention –


➢Competitive compensation packages are essential for attracting and retaining top talent, which is crucial
for the success of any organization

7. Motivation and performance


➢Adequate compensation can motivate employees to perform better, leading to improved productivity and
overall business performance.
Compensation: Definition
I. Society
✓ The total package of financial and non-financial rewards that an individual receives in return for their work, with a focus on
fairness, equity, and the provision of essential benefits that contribute to the well-being of employees and their families

II. Stockholders
✓ Primarily interested in the financial performance of the company they have invested in.
✓ Primarily goal is to maximize their return on investment.

III. Managers
✓ A strategic tool used to manage costs, attract, and retain talent, align employee behaviour with organizational goals, and support
the achievement of strategic objectives to changing market condition.

IV. Employees
✓ the direct and indirect financial rewards they receive in exchange for their work and contributions to the
organization. It encompasses a wide range of benefits and perks that employees consider when evaluating
their job satisfaction, loyalty, and overall well-being.
Incentive and Sorting Effects of
Pay on Employees’ Behaviours
Pay can influence employee motivation and behaviour in two ways.

1. Pay can affect the motivational intensity, direction, and persistence of current employees.

2. Pay can also have an indirect but important, influence via a sorting effect on the composition
of the workforce.

➢ higher pay levels help organizations to attract more high quality applicants, allowing them to be more selective in hiring.
➢ Higher pay levels may improve employee retention.
Global Views of Compensation
English
✓Something that counterbalances, offsets, or makes up for something else.
✓It combines entitlement, return, and reward

China
✓It provides the necessities in life.

Japanese
✓Known as “kyuyo”, means “giving something” or something given by one’s superior.
Forms of Pay
The Pay
Model
Thank You

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