06 Sep Managing Salary and Compensation Data with Compensation Management Software
What is Compensation Management?
In today’s post-recession era, every organization needs to effectively manage their human capital to maintain a competitive edge. This means strategies to attain optimal organizational results, integrating employee processes, programs and information with organizational processes.
Certainly, Compensation Management is an organized way to balance the relationship between employers and employees in terms of monetary and non-monetary benefits to the employees. It is a way to reward the employees in terms of their performance and presentation. The compensation given to the employees can be either in terms of monetary or non-monetary rewards.
Monetary rewards include profit sharing, bonuses, sales commission, overtime pay and recognition rewards. However, non-monetary rewards include perks such as company paid housing, paid car and stock options. Both types of compensation, monetary and non-monetary, are a crucial part of compensation management that helps in improving organizational effectiveness and encouraging the employee’s performance as well.
Compensation Management Basics: The Two Types of Compensation
Basically, there are two types of compensation- Direct compensation and indirect compensation.
- Direct Compensation- This kind of compensation involves health benefits and salary payments. The main responsibility of the compensation management staff is to create pay scales and salary ranges for different position of the employees in the company. Direct compensation provides employees with the guarantee that they are getting paid appropriately and fairly.
- Indirect Compensation- On the other hand, indirect compensation depends on the personal performance of the employee. However, salary plays a major role, but those who are highly productive in their jobs share the priorities and values of the company. The benefits of indirect compensation include promotions, transfers within the company, free staff development courses and more.
Many organizations have to make changes to their compensation plans once a year. Depending on the organization’s size, this digitizing the process to make these regular changes can be quite time consuming and easier said than done. Basically, small organizations can easily manage their compensation process either manually or through a spreadsheet. But when it comes to large sized organizations, compensation management with spreadsheets becomes a very difficult and time consuming process. To make this task easier, Compensation Management Software has been introduced.
Why Compensation Management Software is Important?
Compensation management software is an automated option for employers to distribute funds for their unswerving reports. Generally, when an employer logs in to the system, they will see a variety of reimburseent programs such as stock, equity, merit, bonus and several more that could apply to the employees. The employer can then distribute funds and the changes are saved for HR appraisal.
By using compensation management software, the managers get a clear depiction of their employees and have all the crucial information about employee performance that helps them decide appropriate compensation recommendations. Moreover, it helps in increased employee retention and reduces labor cost.
Compensation Management plays a vital role in many organizations. Depending on the complexities and size of an organization, compensation management can provide huge benefits not only for HR, but for the complete organization.
For more information about compensation management or any of our other High Impact Talent Management software solutions, please contact us at http://hrsoft.com.