Kbunche_week3 - our assignment is to write a short paper(500 to 750 words defining compensation compensation philosophy and critical components of

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our assignment is to write a short paper (500 to 750 words) defining compensation, compensation philosophy, and critical components of a compensation strategy. Provide one solid example of an effective compensation practice/policy. Your paper will be graded as follows: Definition of Compensation Overview of Compensation Philosophy https://www.credit- suisse.com/investors/doc/compensation_philosophy_en.pdf Critical Components of a Compensation Strategy Example of a Effective Compensation Practice/Policy Definition of Compensation One of the most important challenges that the human resource department faces is to design a compensation program that is well structured, fair and competitive. Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction (hrmaster, 2000). Pay is one of the largest costs for any employer. There are two basic types of compensation within an organization: direct and indirect compensation. Direct compensation includes; salaries, bonuses and commission. Indirect compensation is very costly to the employers, therefore, it needs to be managed well. Indirect compensation includes; insurance, retirement, tuition reimbursement. Overview of Compensation Philosophy Compensation philosophy is an plan used to show and answer the many concerns by employees, such as, how the workforce are to be paid, when will compensation increase, and at what period of the working year are bonuses most appropriate. This plan is available to employees so that they can have a clear idea of the organization’s philosophy and can thus determine their treatment by the organization, as it relates to compensation, not just at present but also in the future (Christensen- Ellis, Tricia, 2003).
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The goal of pay philosophy is to encourage a company to use good compensation strategies which would help to attract, motivate and retain employees. An example include, because of the very competitive market, employers should offer competitive salaries to help
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This note was uploaded on 11/10/2010 for the course HRM HRM430 taught by Professor Carla during the Spring '10 term at DeVry Chicago.

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Kbunche_week3 - our assignment is to write a short paper(500 to 750 words defining compensation compensation philosophy and critical components of

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