For most organizations today, the
ability to attract and retain top talent in a highly competitive environment is
at the forefront of their business development efforts. Contrary to the popular
belief, attracting, motivating and retaining a highly-skilled and diverse
workforce in a limited budget is quite possible. For this, companies need to
have a more strategic approach to compensation management.
Taking
A Closer Look At Compensation Management
Compensation management is the
process aimed at ensuring that any investment decisions related to paying the
employees of an organization are made in an effective manner. In this context,
organizations generally seek the help and advice of HR strategy consultants and compensation professionals for
developing a well-defined compensation management process. The processes focus
on the key objectives of ensuring appropriate compensation to professionals
with different skills and experience levels, generating a return on investment
and maximize the productivity of employees with the help of rewards and
benefits. In addition, the process also uses compensation data to accurately
predict the likely contributions of the employees to the organization in the
future. This data is provided by managers based on their understanding of
individual employees and their complete skill set and capabilities.
Developing
An Efficient Compensation Management Program
An efficient compensation management
program aims to enhance employee engagement besides aligning the business
objectives of an organization. However, developing such a program is not an
easy task as it involves the alignment of compensation plans with the financial
and HR objectives. This helps in placing compensation as the key component of
the overall talent strategy of an organization and fostering a culture based on
performance. According to the experts from strategy execution consulting firms, employees feel valued in an organization that
follows trusted performance feedback and promptly delivered reward system.
This, in turn, helps in driving performance and ensuring better returns on
compensation investments.
Promoting
Manager- Employee Communication
An important aspect of developing an
efficient compensation management program is efficient communication between
managers and employees. Promoting a transparent dialogue between managers and
employees helps the leaders to efficiently communicate the basis of staffing
and pay decisions. It also helps them to explain any compensation discrepancies
to the employees with the support of reliable and fair data. Professionals
offering leadership consulting services
also stress on the importance of promoting a coaching dialogue between managers
and employees. Such dialogue helps the managers to gain a better understanding
of the employee capabilities and their significance towards fulfillment of
business objectives. This information can then be used for taking more accurate
and effective compensation decisions in the future.
Significance
Of Rewards And Recognition
It has become important for business
organizations to ensure that they invest in employees, who contribute more to
the organization while staying within their compensation budget. Moreover, frequent
and informal rewards and recognition also need to be factored in for efficient
compensation planning. A well-planned compensation program aligns award
categories with employee behaviors that the organizations need to encourage.
For this managers need to gain a clear understanding of both the financial and
HR objectives of the company. It helps in incorporating a company culture where
rewarded behaviors are supported by organizational values.
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