Compensation is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees.
Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness.
Compensation management is a general policy, implemented in conjunction with specialized software, designed to help an organization maximize the returns on available talent. The ultimate goal is to reward the right people to the greatest extent for the most relevant reasons.
Compensation management software can optimize salary, bonus, stock option, and benefits budgets to yield the maximum profit per employee or per work hour. However, any organization or business requires a competent and sensitive human management team at least as much as it needs effective computer programs.
The ideal compensation management policy ensures that the best talent will remain with the organization while attracting new talent and minimizing turnover. In conjunction with benefitsadministration and workforce analytic, an effective compensation management policy steers employees toward behaviors that enhance personal well-being and minimize the risk of burnout.