3 MAIN goals of Compensation: Attract, Retain, Motivate.
- Attract: higher salaries, more attractive, more qualified employees.
- Retain: well-paid employees tend to stay even tasks are relatively
difficult. I.e. students working part time jobs. The longer you’ve stayed
it’s usually more difficult because of salary progression… in effect,
they’re more likely to stay with the company.
- Motivate: incentive systems motivate employees. Salary equities, for
example. Best way is Incentive Compensation.
Impacts of compensation on HRM functions:
- Recruitment: pay level affecting the number of applicants.
- Selection: selection standards.
- Training and development: pay motivates employees.
- Compensation management: bases employee’s rate of pay.
- Labor relations: high pay discourages unionization, which is a good
- Focus employees on clients, customers, etc. creating competitive
- Having well-motivated and well-paid people working in the
- Reinforcing organization values and cultures.
Compensation is to link employees with the