Q. Show Importance of the compensation ?
Compensation and reward system plays a vital role in a business organization. Since, among four ms, Men, material, machine, and money, Men has been most important factor,, it is impossible to imagine a business process without a men. Every factor contributes to the process of production / business. It expects return from the business process such as rent in the return expected by the land lord, capitalist expects interest and organizer, and entrepreneur expects profits. Similarly the labour expects wages from the process. Labour plays a vital role in bringing about the process of the production / business in motion. The other factors being human, has expectations, emotions, ambitions and egos. Labour therefore expects to have fair share in the business / production process. Therefore a fair compensation system is a must for the every business organization. The fair compensation system will help in the following:
1. An ideal compensation system will have positive impact on the effectively and results produced by the employees. It will encourage the employees to perform their better and achieve the standards fixed.
2. It will enhance the process of job evaluation. It will also help in setting up an ideal job evaluation and at the set standards would be more realistic and achievable.
3. Such a system should be simple be well defined and uniform. It will be apply to all the levels of the organization as a general system.
4. The system should be simple and flexible so the every employee would be able to compute his own compensation receivable.
5. It should be easy to implement, should not result in exploitation of workers.
6. It will raise the morale, efficiency and cooperation among the workers. It being just and fair would provide satisfaction to the workers.
7. Such system would help management in complying with the various labour acts.
8. Such system should also follow the management also solve disputes between the employee and employees.
9. The system should follow the management principal of equal pay.
10. It should motivate and encouragement those who perform better and should provide opportunities for those who wish to excel.