Compensation:

Compensation Package is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees. Compensation includes payments such as bonuses, profit sharing, overtime pay, recognition rewards and sales commission. Compensation can also include non-monetary perks such as a company-paid car, company-paid housing and stock options. Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness.

Importance of Compensation Package:

The current competitive conditions in the business world make it difficult to acquire and retain the top talents. Once the organization is able to identify, it can be unable to offer the right pay and to manage the pay increases to retain top talents. The compensation strategy is the extremely important piece of the overall HR Strategy to keep the company competitive and successful. On the other hand, the compensation strategy is important to keep the personnel budget under the control and to manage the jobs in the right salary (pay) brackets.

The compensation strategy differentiates the organization on the job market and builds the attractiveness of the company for the top talents. They love to be hired by the attractive organization, they do not like to be hired by the average company offering the same conditions as any other average organization in the industry.

A good compensation is must for every business organization and helps in the following way:

1. It tries to give proper return to the workers for their contributions to the organization.

2. It imparts a positive control on the efficiency of employees and encourages them to perform better and achieve the specific standards.

3. It forms a basis of happiness and satisfaction