Question: What is the process of determining compensation?

What are the steps of determining compensation?

Compensation Plan – 6 Major Steps in Designing a Compensation Plan

  • Step # 1. Determine Sales Force and Compensation Objectives:
  • Step # 2. Determine Major Compensation Issues:
  • Step # 3. Implement Long-Term and Short-Term Compensation Plans:
  • Step # 4. Relate Rewards to Performance:
  • Step # 6.

What are the determinants of compensation?

I. External Determinants of Compensation:

  • Labour Market Conditions:
  • Economic Conditions:
  • Prevailing Wage Level:
  • Government Control:
  • Cost of Living:
  • Union’s Influence:
  • Globalization:
  • Cross Sector Mobility:

How do companies determine compensation package?

The level of a firm’s compensation is determined by the firm’s financial condition (or profitability), efficiency, and employee productivity, as well as the going rates paid by competitors.

What are the 4 steps of creating a compensation plan?

How to Create a Compensation Plan:

  • Start from scratch. …
  • Create a job description for each position. …
  • Determine the appropriate amount of compensation. …
  • Factor in overtime. …
  • Identify the benefits and incentives that you will provide. …
  • Detail your decisions in a document.

What are the essential factor for determining compensation?

The following factors should be taken into consideration in determining wage and salary structure of workers:

  • (i) Labour Unions:
  • (ii) Personal perception of wage:
  • (iii) Cost of living:
  • (iv) Government legislation:
  • (v) Ability to pay:
  • (vi) Supply and demand:
  • (vii) Productivity:
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What are the four types of compensation?

The Four Major Types of Direct Compensation: Hourly, Salary, Commission, Bonuses. When asking about compensation, most people want to know about direct compensation, particularly base pay and variable pay.

What is compensation in compensation management?

Compensation is the reward or remuneration paid to the employees in return for the service rendered. Such compensation package includes both monetary and non-monetary components.

What is compensation approach?

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.

What do you understand about compensation?

Typically, compensation refers to monetary payment given to an individual in exchange for their services. In the workplace, compensation is what is earned by employees. It includes salary or wages in addition to commission and any incentives or perks that come with the given employee’s position.