Question

a) Discuss the five steps in designing the effective compensation system.
b) Why a compensation system must be viewed in the context of the total reward system?
c) With the help of the diagram discuss the concept of FIT in an organization

Answer 1

a) The five steps in designing the effective compensation system:-

Salaries are a business investment and in order to make sure that we set clear and cut- throat compensation for jobs it's important to use a structured method for setting compensation as against to choosing a random salary.
There are five easy steps for setting compensation,

1)Define the job's purpose, essential duties and responsibilities,
2)Price the job,
3) Determine the job's value to the organization,
4) Review where a job fits within a grade,
5) consider organizational factors including, budget.

b) Compensation system must be viewed in the total reward system:-

A compensation system must be observed in the reference bof the total reward system because total reward system is the design of financial and non financial rewards that encourages employees behaviour.Under a total rewards notions companies should first develope a suitable compensation strategy.

c) the concept of FIT in an organisation:-
This concept assumes that each organizational dimension, like structure, rewards has been assumed as an internal consistency among key planned decisions between strategic choices and critical relationship with environment.
diagram