Compensation Management

Compensation of an employee is the total amount of remuneration that is received in cash or kind payable by an enterprise to an employee in return for the work done during the accounting period. It refers to all forms of pay and reward owing to the employees arising out of their employment. Compensation is what the employees receive in exchange in exchange for their contributions to the organizations. It is the value of social contributions made by the employers. Compensations include wages and salaries. There are various objectives for compensation which includes maintaining equity, attracting talent, and retaining talent, finding out new and desired behavior, it helps in controlling costs and also helps in complying with legal rules. Another major function is that it helps in the ease of operation. There are various factors that influence the compensation management are the organizations ability to pay, the supply and demand of labour, the prevailing market rate, the cost of living and the productivity of the firm. Compensation can be used for motivating the employees. It helps in fostering values and culture in their employees. It helps the organization in achieving their objectives.