Employees are considered to be one of the most important assets of the company and it is a well-known fact that a company’s success rate depends on its employees’ performance to a great extent. In today’s competitive market scenario, compensation management acts as the driving factor for yielding optimum performance.
Compensation is the reward or monetary benefit given to employees in return for their exemplary services and work or in recognition of merit and it is said to be the cornerstone of a productive workforce. To provide appropriate, adequate and fair compensation to the employees within the boundaries of budget and resources is a milestone achieved by very few organizations.
An automated and strategic compensation management system that addresses compensation, benefits, recognition, and appreciation is the basis of acquiring a productive work environment.
A study on the effect of compensation on employees’ performance has revealed that compensation in the form of salary, wages, bonuses, facilities, travel programs, and holiday allowance has a direct and positive impact on employees’ efficiency and performance. Systematic compensation management in the company impacts employees’ performance and therefore the company’s growth through the following factors:
Provide Higher Job Satisfaction
Creating the right compensation plan leads to higher job satisfaction among the employees. When we talk about job satisfaction in the corporate world, it is somehow related to the salary drawn by the employee. Employees tend to measure their efforts and contribution to the organization’s uplift through the monetary benefits they avail.
With an upright salary management system, the HR department can ensure that employees attain maximum satisfaction from their work as it enables the HR department to revise the salary plans and incentives at regular intervals. That in turn, boost employees’ dedication towards work.
Help In Retaining Valuable Employees
A company’s success can be estimated through its capability to retain valuable employees. In this highly competitive industry, the challenges faced by the HR department are not limited to approaching and recruiting the right candidates but also retaining them. Compensation management software eases the task of retaining employees by providing continuous appreciation and consideration in the form of increment and incentives.
Enhance Employees’ Efficiency
The growth of a company is the outcome of its employees’ efficiency. Yielding the maximum efficiency from the available workforce is the key factor in attaining business milestones. Providing proper compensation to the employees helps in enhancing their efficiency as it encourages them to give their best and perform their work with utmost dedication.
Keep Employees Motivated
Bonus and incentive plans act as the driving factor for keeping up the spirits of the employees at the workplace. When employees know there are bonuses or incentives, they tend to stay motivated and deliver better results in lesser time. A study by CEB reveals that an organization without the right compensation management system encounters an increase in employee disengagement and turnover by 15%-50%. Through well-organized compensation plans, employers achieve higher productivity and overall growth of the company.
Improve Employees’ Productivity
Happy employees are the most productive ones. The productivity of every individual employee is one of the most eminent factors in determining a company’s progress. Compensation management helps employers to provide higher work satisfaction to the employees which in turn improves work productivity and profitability. A CBD oil company increases its employees' productivity by 25% after implementing the compensation management software.
According to research conducted by CEB, the lack of astute compensation management in an organization leads to low performance and productivity of employees in the tune of *38%. An effective reward system improves the quality and quantity of work executed by the employees and aligns their performance with organizational objectives.
Summing Up
A well-crafted compensation plan paves way for the company’s ultimate success and has a great impact on employees’ overall performance.
Implementing a robust, flexible and efficient compensation management software like Compport can prove to be extremely beneficial for the companies as it simplifies various HR processes and synchronizes the work performance with analytics.