Question

What is an example of a compensation goal of an organization (long term/short term)?

Answer 1

• The compensation goal of an organization is designed to attract the workforce to work and retain people who are already engaged with the organization.
• It is an important part of the organization's HRM plan to design compensation packages such as bonuses, health care plans, incentives, retirement benefits, recognition for achievement of goals and various other forms of compensation.
• For designing an effective compensation plan, the planning team needs to consider the overall budget allocated towards employee compensation and the target performance required to be achieved by employees.

Long term /Short term Goals:

1. The Labour turnover rate will decrease with effective compensation packages and as a result, companies cost of training new employees will be saved.
2. Employees with adequate compensation tend to provide better service and are highly motivated which in turn leads to organizational growth and development.
3. Highly Motivated employees are committed to working even in the odd situation faced by the organization.
4. Adequate quid pro quo incentives help the organization retain its key employees who are aware of the companies confidential information, leakage of which can result in a huge financial loss to the organization.
5. Compensation packages such as incentives motivate employees to learn and grow which equip them with new skill sets required in the dynamic market.

The compensation policies of an organization should be reviewed and revised regularly to be competitive with the market.