What are the steps in the process of compensation administration?

What is process of compensation?

Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction.

What are the 4 steps of creating a compensation plan?

How to Create a Compensation Plan:

  • Start from scratch. …
  • Create a job description for each position. …
  • Determine the appropriate amount of compensation. …
  • Factor in overtime. …
  • Identify the benefits and incentives that you will provide. …
  • Detail your decisions in a document.

What are the 4 components of compensation?

Total compensation would include all four categories: guaranteed pay (salary and allowances), variable pay, benefits and equity compensation. Remuneration is a term often used to refer to total cash compensation or total compensation.

What are the main objectives of compensation administration?

The ultimate objectives of compensation administration are – efficient maintenance of a productive workforce, equitable pay, and compliance with federal, state, and local regulations based on what companies can afford.

What are the basic objectives and principles of compensation administration?

The objectives of compensation management are to attract, engage, and retain employees through competitive compensation plans that align with the company budget, corresponding job-market, and government regulations. Good compensation management should: Attract and recruit talent. Motivate employees.

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What are the types of compensation plan?

Types of Compensation Plans for Compensating Employees Beyond Commissions:

  • Straight Salary Compensation. Straight salary refers to the basic salaries and wage given to the worker. …
  • Salary plus Commission. …
  • Commission Only. …
  • Territory Volume Compensation Plans. …
  • Profit Margin/Revenue Based Compensation Plans. …
  • Residual Commission.

How do you do a compensation plan?

How to develop and implement a compensation plan

  1. Create an outline. …
  2. Appoint a compensation manager. …
  3. Create a compensation philosophy. …
  4. Rank jobs and place them within a matrix. …
  5. Develop grades for seniority within each job classification. …
  6. Settle on salaries and hourly rates of pay. …
  7. Complete necessary policies.

What is a compensation structure?

Compensation structures are the pay-based frameworks companies use to establish fair and equitable pay for all employees in the organization. A compensation structure gives a business clear guidelines for assigning initial pay rates, managing raises and distributing bonuses.