Designate an individual to oversee designing the compensation program. Decide the extent to which employee benefits should. Prepare a matrix organizational.

Compensation administration is a segment of or human resource management focusing on planning, organizing, and controlling the direct and indirect payments employees receive for the work they perform. Compensation includes direct forms such as base, merit, and incentive pay and indirect forms such as vacation pay, deferred payment, and health insurance. Compensation does not refer, however, to other kinds of employee rewards such as recognition ceremonies and achievement parties. The ultimate objectives of compensation administration are: efficient maintenance of a productive workforce, equitable pay, and compliance with federal, state, and local regulations based on what companies can afford.

The basic concept of compensation administration—compensation management—is rather simple: employees perform tasks for employers and so companies pay employees wages for the jobs they do. Consequently, compensation is an exchange or a transaction, from which both parties—employers and employees—benefit: both parties receive something for giving something. Compensation, however, involves much more than this simple transaction. Program Kerja Kkn Bidang Kesehatan. From the employer's perspective, compensation is an issue of both affordability and employee motivation. Companies must consider what they can reasonably afford to pay their employees and the ramifications of their decisions: will they affect and productivity?

In addition, some employers and managers believe pay can influence employee work ethic and behavior and hence link compensation to performance. Moreover social, economic, legal, and political forces also exert influence on compensation management, making it a complicated yet important part of managing a business. Rudimentary pay management has existed for as long as there have been employers and employees. Play Gta On The Computer. Owners of typically small, preindustrial businesses commonly weighed their ability to pay against employee responsibilities and contributions in order to determine compensation.

The rapid development of corporations, multiplication of administrative hierarchies, and specialization of jobs in the 20th century removed owners from the day-to-day evaluation of jobs. Unionization brought a measure of standardization to wage labor, but neither the private sector nor the federal government began to study systematic job evaluation until after World War 1. The federal government spearheaded the development of formal compensation administration with the passage of the Federal Classification Act of 1923, which ranked government jobs and set salary levels accordingly.

Rock and Lance A. Berger, authors of The Compensation Handbook, credited human resource professional Edward N. Hay with providing a foundation for 20th-century compensation management. Hay began his work in the late 1930s, when his employer, a bank, asked him to create a system of pay without ethnic, racial, or gender biases. He embarked on the assignment by analyzing jobs—their duties, responsibilities, skills, education levels, etc.—and composing descriptions based on his findings. Hay operated on the theory that 'something that can be measured has value while something that can't be measured has none.'