It is the biggest pain of Compensation and Benefits - how to introduce the fair and transparent compensation policy to the organization. In the public sector, this issue is quite easy to solve as their compensation scheme are pretty rigid and people get used to them. But in the large corporations - the transparency and fairness of the compensation policy can be a real issue to the employees.
The organizations usually know what it means to have a fair and transparent compensation policy. But the pressure of the business and the constant need to change makes almost impossible to make the compensation policy transparent and fair to all the employees. It needs a lot of time and effort.
Fair Compensation Policy
Fair Compensation Policy needs a clear definition of job descriptions and job profiles in the organization. The value of each job must be evaluated and the organization must develop a clear system of jobs within the organization. In this stage the HRM is under a big pressure as the managers know about the impact of the job evaluation to the real salaries and bonuses. The whole system must be clearly supported by the Top Management of the company.
When the organization has a clear system of job evaluation and all the job positions are put in the correct order, the organization can develop the Fair Compensation Policy. The fair compensation policy takes the following inputs:
- job evaluation
- job market situation
- business strategy
- preferences of the organization
Based on the inputs the HRM can prepare the fair compensation policy, which enables the company to reach better performance. The HRM is responsible for the correct setting and keeping the rules during the procedure of creation of the fair compensation policy. The fair compensation policy means the fair value of each job in the organization and clear process of reaching this fair value.
Transparent Compensation Policy
Transparent Compensation Policy is about opening the rules for the compensation policy to employees. When the employees have a chance to understand the principles of the compensation policy and they can take them as fair to them, you are successful in the implementation of the Transparent Compensation Policy.
The Transparent Compensation Policy is about the courage to open the rules and the compensation policy must be ready to be open. In case, the compensation policy is not fully implemented and the employees are not fully in the compensation range, it is very dangerous to make compensation policy transparent.
Honestly, these basic rules about the Fair and Transparent Compensation Policy are easy to write, but very hard to follow in the real business life. But every HRM should implement Fair and Transparent Compensation Policy to support the performance of the business and to increase satisfaction of employees.
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