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HMM Compensation

Compensation in Human Resource Management encompasses all rewards employees receive for their work, including both monetary and non-monetary forms. Key components include direct compensation (base pay, incentives, allowances), indirect compensation (benefits, perks), and non-financial rewards. Effective compensation management aims to attract and retain talent, motivate employees, ensure fairness, and comply with legal requirements while being influenced by internal and external factors.

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8 views2 pages

HMM Compensation

Compensation in Human Resource Management encompasses all rewards employees receive for their work, including both monetary and non-monetary forms. Key components include direct compensation (base pay, incentives, allowances), indirect compensation (benefits, perks), and non-financial rewards. Effective compensation management aims to attract and retain talent, motivate employees, ensure fairness, and comply with legal requirements while being influenced by internal and external factors.

Uploaded by

Abir Hasan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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HRM Compensation

Compensation in Human Resource Management (HRM) refers to all the rewards, monetary and
non-monetary, that employees receive in exchange for their work. It is a crucial aspect of HRM
because it motivates employees, helps attract and retain talent, and influences job satisfaction
and performance.

🔸 Components of Compensation

1. Direct Compensation (Monetary)


o Base Pay (Salary/Wages): Fixed regular payment based on job role or hours
worked.
o Incentives: Performance-based rewards like bonuses, commissions, or profit
sharing.
o Allowances: Extra payments for specific purposes (e.g., travel, housing).
2. Indirect Compensation (Non-monetary)
o Benefits: Health insurance, retirement plans, paid leave, education assistance.
o Perks: Company car, gym membership, flexible working hours.
3. Non-Financial Rewards
o Recognition, career development opportunities, positive work environment.

🔸 Objectives of Compensation Management

 Attract qualified candidates


 Retain valuable employees
 Motivate and reward employees
 Ensure internal equity (fairness within the company)
 Maintain external competitiveness (competitive with other employers)
 Comply with legal and regulatory requirements

🔸 Factors Affecting Compensation

 Internal Factors: Job responsibilities, employee performance, company policies, budget.


 External Factors: Labor market conditions, industry standards, economic factors, legal
regulations.
🔸 Types of Compensation Systems
System Description

Hourly Paid based on hours worked; common in part-time or


Wage manual jobs.

Salary Fixed payment, usually monthly or annually.

Commissio
Payment based on sales or performance.
n

Additional pay for achieving specific goals or company


Bonus
profits.

Profit
Employees receive a share of company profits.
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