Compensation Management: Components of Compensation System

Compensation Management
Human Resource is the most vital resource for any organization. It is responsible for
each and every decision taken, each and every work done and each and every result.
Employees should be managed properly and motivated by providing best remuneration
and compensation as per the industry standards. The lucrative compensation will also
serve the need for attracting and retaining the best employees.

Compensation is the remuneration received by an employee in return for his/her

contribution to the organization. It is an organized practice that involves balancing the
work-employee relation by providing monetary and non-monetary benefits to
employees.
Compensation is an integral part of human resource management which helps in

motivating the employees and improving organizational effectiveness.

Components of Compensation System
Our Compensation system is designed keeping in minds the strategic goals and
business objectives. Compensation system designed is on the basis of certain factors
after
Analysing the job work and responsibilities. Components of a compensation system
are as follows:

Types of Compensation
We are intending to give 2 types of compensation.

 Direct compensation and
 Indirect compensation

Need of Compensation Management
 A good compensation package is important to motivate the employees to

increase the organizational productivity.
 Unless compensation is provided no one will come and work for the
organization. Thus, compensation helps in running an organization effectively
and accomplishing its goals.
 Salary is just a part of the compensation system, the employees have other
psychological and self-actualization needs to fulfil. Thus, compensation serves
the purpose.
 The most competitive compensation will help the organization to attract and
sustain the best talent. The compensation package should be as per industry
standards.

Strategic Compensation
Strategic compensation is determining and providing the compensation packages to

the employees that are aligned with the business goals and objectives. In today’s
competitive scenario we have to take special measures regarding compensation of the
employees so that the organizations retain the valuable employees. The compensation
systems have changed from traditional ones to strategic compensation systems
DIRECT COMPENSATION
House Rent Allowance

Hiedenberg either provide accommodations to its employees who are from different
state or country or they provide house rent allowances to its employees. This is done to
provide them social security and motivate them to work.

Conveyance
Hiedenberg provide for cab facilities to employees. We even provide petrol

Allowances to our employees to motivate them.

Leave Travel Allowance
These allowances are provided to retain the best talent in the organization. The
employees are given allowances to visit any place they wish with their families. The
allowances are scaled as per the position of employee in the organization.
Medical Reimbursement
Hiedenberg also look after the health conditions of their employees. The employees
are provided with medical-claims for them and their family members. These medical-
claims include health-insurances and treatment bills reimbursements.

Bonus
Bonus is paid to the employees during festive seasons to motivate them and provide
them the social security. The bonus amount usually amounts to one month’s salary of
the employee.
Special Allowance
Special allowance such as overtime, mobile allowances, meals, commissions, travel

expenses, reduced interest loans; insurance, club memberships, etc. are provided to
employees to provide them social security and motivate them which improve the
organizational productivity
INDIRECT COMPENSATIONS
Indirect compensation refers to non-monetary benefits offered and provided to

employees in lieu of the services provided by them to the organization. They include
Leave Policy, Overtime Policy, Car policy, Hospitalization, Insurance, Leave travel
Assistance Limits,
Retirement
Benefits, Holiday
Homes.
Leave Policy
It is the right of employee to get adequate number of leave while working with the
organization. The organizations provide for paid leaves such as, casual leaves, medical
leaves (sick leave), and maternity leaves, statutory pay, etc.
Overtime Policy
Employees will be provided with the adequate allowances and facilities during their
overtime, if they happened to do so, such as transport facilities, overtime pay, etc.
Hospitalization
The employees are provided allowances to get their regular check-ups, say at an
interval of one year. Even their dependents are eligible for the medical-claims that
provide them emotional and social security.
Insurance
Hiedenberg also provide for accidental insurance and life insurance for employees.
This gives them the emotional security and they feel themselves valued in our
organization.
Leave Travel
The employees are provided with leaves and travel allowances to go for holiday with
their families. Some organizations arrange for a tour for the employees of the
Organisation. This is usually done to make the employees stress free.

Retirement Benefits
Hiedenberg provide for pension plans and other benefits for their employees which
benefits them after they retire from the organization at the prescribed age
Holiday Homes
Hiedenberg provide for holiday homes and guest house for their employees at different
locations. These holiday homes are usually located in hill station and other most
wanted holiday spots. The organization makes sure that the employees do not face any
kind of difficulties during their stay in the guest house.
Flexible Timings
Our Organizations provides flexible timings to the employees who cannot come to
work during normal shifts due to their personal problems and valid reasons.
Salary structure for employees at different level
CEO
BOARD OF MEMBERS
SENIOR MANAGERS
MANGAERS
ASSITANT MANAGERS
SUPERVISORS
CLERKS
WORKERS
PEERS

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Compensation Management

Compensation is the remuneration received by an employee in return for his/her

Compensation is an integral part of human resource management which helps in

Components of Compensation System

We are intending to give 2 types of compensation.

Need of Compensation Management

 A good compensation package is important to motivate the employees to

Strategic compensation is determining and providing the compensation packages to

House Rent Allowance

Hiedenberg provide for cab facilities to employees. We even provide petrol

Special allowance such as overtime, mobile allowances, meals, commissions, travel

Indirect compensation refers to non-monetary benefits offered and provided to

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