Strategic Compensation Management

Strategic Compensation Management

The strategic use of rewards to regulate behaviour and performance has led to the concept of compensation management’ or ‘reward systems’- terms, which belong in the HRM, rather than the Industrial relations, framework.“Remuneration’ refers to monetary rewards, which are seen as one arm of total compensation.

A total reward or compensation system would have a number of components, based on the distinctions between Intrinsic Rewards and Extrinsic Rewards. Intrinsic rewards are non-monetary and include rewards of three types:

1. Job satisfaction- Included in this category are the interest, variety and autonomy of the job, and its capacity to respect the dignity and creativity of the worker.

2. Social aspects of the job- These aspects include the companionship and friendship networks which people derive from coming to work, and the recognition that they are accorded, both through doing a fulfilling job and through social interaction.

3. Career Paths- Career progression is an indirect
form of monetary reward, achieved over time. Alternatively it is a means of enhancing job satisfaction.

Extrinsic rewards are monetary rewards. They are of two types; Direct and Indirect.
(i) Indirect benefits include:

(a)Benefits that may be mandated by legislation.
e.g, employer contributions to provident su-
perannuating funds.

(b)Minimum leave entitlements.