LAWS THAT GOVERN COMPENSATION MANAGEMENT PRACTICES
Many things influence the compensation of employees in the organization. Some are internal to the organization such as employee policies and culture. Others are external such as the labor market and law. This paper describes the internal and external factors influencing compensation.
The compensation management practices are;
Reward system practices
The effective reward system has four elements; rewards need to satisfy the primary needs of all employees; rewards need to be included in the system and be comparable to ones offered by a competitive organization in the same area; rewards need to be available to employees in the same positions and be provided fairly and equitably.
- Incentives practices
Developing a practical incentive for implementation and performance improvement is a challenging task because individuals are unique and maintain different values and structures. Incentives are usually in monetary rewards forms or other types of incentive-based compensation which are share ownership and additional benefit like bonuses, and rewards that are usually provided to improve employee performance
- Pay policies and structure
The compensation system influences the performance of employees by differentiating the types of compensation into; reward, salary, and incentives.