In Human resource management (HRM), compensation and benefits refer to the policies, practices, and programs that organizations develop and implement to manage the rewards and incentives provided to employees.
Compensation in HRM includes:
- Job analysis and evaluation
- Salary structure
- Performance management
1. Job analysis and evaluation: HRM professionals analyze and evaluate roles and responsibilities to determine the relative effectiveness of various positions that helps in establishing salary ranges and compensation level.
2. Salary structure: HRM professionals develop a system related to the salary ranges in various levels that ensure salaries are aligned to the different job levels. They handle salary administration, such as negotiations, promotions, and salary adjustments.
3. Performance management: HRM professionals play a wide role in creating and implementing performance management systems by establishing performance criteria, conducting performance, and providing feedback that informs compensation based on the merits.
Benefits of HRM:
- Benefit plan design
- Communication and employee education
- Compliance and legal requirements
1. Benefit plan design: HRM professionals create designs that align with the objectives of the organizations and meet the needs that may include health insurance coverage, retirement plans, and other benefits as well.
2. Communication and employee education: HRM professionals play a prominent role in communicating benefits information to employees by providing guidance, answering issues, and educating employees about the culture effectively.
3. Compliance and legal requirements: HRM Professionals ensure that the organization’s compensation and benefits programs comply with applicable laws and regulations.