Perspectives of compensationCompensation Management

Prepared By

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Manu Melwin JoyAssistant Professor

Ilahia School of Management Studies

Kerala, India.Phone – 9744551114

Mail – manu_melwinjoy@yahoo.com

Perspectives of compensation

• Compensation is a broad

term and may be

interpreted according to

organizational and

individual perspectives.

Perspectives of compensation

Organizational Perspective

• Compensation is viewed as a

segment of human resource

management that emphasizes

planning, organizing and

controlling the various types of

compensation systems for

rewarding employees who

perform their work or render

service.

Organizational Perspective

• Since compensation constitutes

a major part of the operating

cost (as high as 40-50%),

therefore, organizations strive to

keep the cost of compensation

as low as possible without

compromising the quality and

capability of employees.

Employee’s Perspective

• Within organizations, individual

employees have different

interpretations of compensation.

They often view compensation as

reward entitlements and obligations

are determined based on the

employment contract, the value of

the job, the level of personal

contribution, and/ or the level of

performance.

Employee’s Perspective

• Employees, who perceive the

procedures of distributing

compensation and the allocations

of compensation that they receive

are fair, will be motivated to meet

ultimate goal of the organizational

compensation system : efficiency,

equity and compliance of laws

and regulations.