CHALLENGES THAT HUMAN RESOURCE MANAGEMENT FACE TODAY IN DEVELOPING AND IMPLEMENTING EFFECTIVE COMPENSATION PROGRAMS AND WAYS OF MANAGING THEM.
Compensation is an essential issue in Human resource management and affects the relation between workers and management. Human resources departments face challenges in effective compensation management whether brought on by changes in technology economic difficulties or other business factors. The challenges include;
An underlying pay philosophy is a company’s commitment to how it values employees. Pay practices must be consistent, must not be arbitrary, and must not discriminate. Human Resource Management uses a mixture of the three main components of compensation: Base pay, also called salary; incentive pay, whether in the form of cash or non-cash awards such as stock; and benefits, or non-financial rewards. The challenge is to create a payment program that acknowledges that it can retain, attract, and retains via generous compensation without exhausting the resources. The solution is for Human Resource Management to pay a competitive base salary but a salary comparable to what an employee could get somewhere else and not an aggressive one. They should also offer equity to all employees so that they can reap the rewards of the company.
- Controlling labor costs
Human resources compensation specialists and HR department leaders must sometimes work within limited budget constraints. Also, justifying budget increases requires proof of return on investment in HR department activities.
- Salary and wage levels
It depends on the organization able to offer competitive wages to attract qualified applicants. Compensation specialists analyze competitors’ wages, labor market trends, and employment levels to construct compensation policies. when a job offer comes with an attractive benefits package, candidates want fair wages, not necessarily high wages.
- Forms of pay
Some employers offer annual bonuses or incentive pay based on the individual employee’s performance or organizational performance, also called variable pay. The amount of bonuses and incentives is difficult to budget too far ahead if your company is relatively new; however, if you have an incentive program that’s structured and adhered to consistently without favoritism and bias, you can accurately project budget requests for bonuses and incentive pay.
- Workforce training and development
The Human Resource faces a challenge in investing in the training and development of lower-level employees since some may not have time to take a training course or lack the resources to do so.
- Multinational business operations
Human Resource Management must balance the expectations and needs of the compensation practices that must balance the conformity of local laws against global corporate policies.
- Presentation of compensation
The way the Human Resource Manager speaks regarding pay creates ill will when the intention was to deliver good news. It is essential to use specifics when communicating with employees rather than categorize any pay increase. Employee perception of compensation is based on the expectations, individual needs, and values.
- Automation and outsourcing
There is a challenge in automating compensation and outsourcing some compensation functions such as;
Offering competitive pay
The HRM must offer a competitive compensation program to compete for the best available talent pool compared to other companies within the industry.