HRM3705 – COMPENSATION MANAGEMENT lectures note

HRM3705 – COMPENSATION MANAGEMENT STUDY UNIT 1 – Strategic Compensation: A Component of HR systems Learning Outcomes: 1. Define and critically discuss the context of compensation – Compensation refers to all forms of financial returns and tangible services & benefits employees receive as part of an employment relationship. Compensation comprises of Intrinsic & Extrinsic rewards. 2. Differentiate between tactical and strategic decisions and discuss the relevant concepts – Strategic decisions: Guide the activities of companies in the market and are concerned with the entire environment in which the company operates, the resources and the people who form the company and the interface between the two and it supports the business objectives. Tactical decisions: Affect the day-to-day implementation of steps required to reach the goals of a strategy, such as recruitment and it supports the fulfilment of strategic decisions 3. Describe how the compensation function fits into the HR department – Bussin (2011) states that linking the remuneration to the HR functions allows for an integrated service to the business and a greater focus on its strategies. The strategies and goals of the remuneration function include the following: • Developing reward policies that are appropriate and in support of the overall business strategies • Implementing systems and administration procedures that are effective, and that result in reliable management information • Providing comprehensive customer service that is professional, effective and satisfying There are advantages if remuneration/compensation is linked to the HR function:  . Integrated systems  Increased data integrity  Improved information availability  Improved response time  Increased flexibility and ease of change to meet business goals  Improved teamwork ± there is a close working relationship between payroll administration and HR consultants  Effective one-stop employee pay and benefits service and information centre  Enhanced employee communication and education  Improved customer service and satisfaction ..................................................continued.........................................................