Introduction
Compensation is the payment of adequate and equitable remuneration of personnel for their organisational goals. (Flippo,1984)
Any sales organization can reward sales performance in three fundamental and connected ways, Direct financial rewards, Nonfinancial Compensation, Career advancement, and personal development opportunities.
Purpose of Compensation
- Connect individual with the organization
- Influence work behaviour
- Organizational choice/cutting edge of compensation
- Influence Satisfaction
- The Built-in long term vision
- Reinforcement
- The well-being of employees
Features of a good compensation plan
Management, Fairness, Motivation, Flexible, Competitiveness, Cost
Steps in compensation
Review - Compensation plan
The compensation plan should thoroughly review (Legal aspect and complexity terms), Check financial resources that facilitate implementing a plan, and continue in the longer run. The plan should be able to absorb the shocks. Make budgetary provisions to accommodate annual increments of salaries, allowances, and bonuses.
Implementation of a compensation plan
Make a crucial decision on what level they go live on the plan. The compensation plan aimed at the welfare of salespeople and achieved the company objective Must need a proper plan and control that should never overrun the allocated budget.
Strategic Compensation System (SCS)
SCS is another tool for effective human resources management. It has a more significant influence on employee motivation and control. To manage compensation equitably, Design and develop a compensation package that aligns with the company's objectives. Drive performance while boosting motivation in Salespeopl's SCS needs to analyse/measure performance and act as a control tool. Also, the process must adjust with the organization's resource capability and compensation objective.
Methods of Compensation
- Straight salary
- Straight commission
- Combination (Salary and commission, Salary and Bonus)
Conclusion
Sales organizations use combination compensation plans for their sales forces. (Salary + Commission+ Bonus). Set sales targets to salesforce, and the commission will pay for the achievement, and the bonus will pay at the end of the year for the cumulative achievements. Salespeople can have higher income through achieving their targets. Moreover, they will engage with the job, and highly engaged employees will lead the organizations forward.
Reference
Liu, M., Traphagan, T., Huh, J., Koh, Y.I., Choi, G. and McGregor, A., 2008. Designing Web sites for ESL learners: A usability testing study. Calico Journal, 25(2), pp.207-240.
Misch, M., 2015. Safety leadership: the supervisor’s role. Safety First, pp.44-45.
Madalina, B.O.I.A., 2017. Economic And Social Environment-Global Outlook 2016 And Beyond. Revista Economică, 69(1).
Good article. Through your article, you have been on point and you have justified your conclusion that compensation is a motivational tool.
ReplyDeleteCompensation connect to the business structure in terms of attracting, recruiting, motivating, performance evaluating, and improving the satisfaction of employees. For employees, compensation is not only what they receive, but also how much they are valued to the Organisation. Thankyou for sharing Mihirani.
ReplyDeleteCompensation is defined as the total amount of the monetary and non-monetary pay provided to an employee by an employer in return for work performed as required. The compensation that the workers receive for services rendered motivates them. A well designed compensation policy helps to secure the interest, effectiveness and attainment of employee on achieving overall organisational objectives.
ReplyDeleteCompensation is a type of rewards given to employees for their work.
ReplyDeleteCompensation procedure should be organized to meet business goals & objectives. Thusly, HRM ought to think about a mix of financial and non-financial choices to draw in and hold the employees..
Hi Mihirani, you have simply mentioned here about workers compensation. and i would like to add few different types of compensation include some organizations used.
ReplyDelete* overtime pay
* stock options
* Travel/meal/housing allowance
* insurance/medical
thanks for this valuable article.
The most important aspects of any employee's wage are compensation and benefits. Fair compensation serves as the foundation upon which other reward elements can be built, while benefits can sometimes outweigh compensation. HR professionals frequently examine various workplace aspects in order to determine their impact on employee experience, satisfaction, and productivity. While employee recognition, feedback, and communication all have a significant impact on these key employee metrics, they are all predicated on the assumption of fair compensation and valuable employee benefits.
ReplyDelete