Benefits Of Compensation To Organizations
Compensation plays vital role in a business organization. Since, among four ‘M’ which are men, material, machine and money, men has been most important factor, it is impossible to imagine a business process without Men. Land, Labor, Capital and Organization are four major factors of production. Every factor contributes to the process of business. It expects return from the business process such as Rent is the return expected by the Landlord. Similarly capitalist expects interest and organizers like entrepreneur expects profits. The labours expect wages from the process. It is evident that other factors are in-human factors and as such labour plays vital role in bringing about the process of business in motion. The other factors being human, has expectations, emotions, ambitions and egos. Labour therefore expects to have fair share in the business process.
Therefore a fair compensation system is a must for every business organization. The fair compensation system will help in the following:
• If an ideal compensation system is designed, it will have positive impact on the efficiency and results produced by workmen.
• Such system will encourage the normal worker to perform better and achieve the standards fixed.
• Compensation encourage the process of job evaluation. It will also help in setting up an ideal job evaluation, which will have transparency, and the standards fixing would be more realistic and achievable.
• Such a system would be well defined and uniform. It will be apply to all the levels of the organization as a general system.
• The system would be simple and flexible so that every worker would be able to compute his own compensation receivable.
• It will raise the morale, efficiency and cooperation among the workers. It, being just and fair would provide satisfaction to the workers.
• The system would embody itself the principle of equal work equal wages. Encouragement for those who perform better and opportunities for those who...
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