A good compensation is a must for every business organization, as it gives an employee a reason to stick to the company.
An organization gains from a structured compensation management in the following ways −
● It tries to give proper refund to the employees for their contributions to the organization.
● It discovers a positive control on the efficiency of employees and motivates them to perform better and achieve the specific standards.
● It creates a base for happiness and satisfaction of the workforce that limits the labor turnover and confers a stable organization.
● It enhances the job evaluation process, which in return helps in setting up more realistic and achievable standards.
● It is designed to abide with the various labor acts and thus does not result in conflicts between the employee union and the management. This creates a peaceful relationship between the employer and the employees.
● It excites an environment of morale, efficiency and cooperation among the workers and ensures satisfaction to the workers.
In short, we can say that compensation management is required as it encourages the employees to perform better and show their excellence as well as provides growth and development options to the deserving employees.