The notion of compensation in HRM

Every worker would certainly expect compensation from the company employ it as retribution upon their work. For a company, a system of good and effective compensation will be easier to obtain and retain the employees they need. So in reality, the system of compensation of good will can benefit both parties both for employees of itself as well as for companies that implement it. The relationship between Company and employees is basically a relationship of mutual benefit or usually called symbiotic relationship with Mutualistic.

Simply put, Compensation (compensation) can we definition as everything is received by an employee as retribution upon their work. Compensation given to employees of the company can be in the form of Money or the granting of material (object)/Facilities or a better career opportunity. The grant money can be in the form of salary, bonuses, overtime wages, profit sharing of work, sales commissions, incentives and benefits, while the granting of Material (objects) and Facilities can be either provide housing, transport or cars, and Stocks the company.

As mentioned before, a good compensation package will be able to attract and retain employees. An employee expects a fair Compensation to cover the cost of living and can set aside a portion of the income to savings and recreational purposes.

The goal of Compensation in human resource management

Any activity carried out must have goals reached, so too a compensation system applied by the company. The following are some of the Goals to be achieved from the grant of Compensation:

1. Obtain quality Employees and in accordance with the needs of the company.


2. Retain existing Employees now.


3. Appreciate the work achievement, productivity and loyalty of employees.


4. Guarantee of Justice.


5. Control costs especially in cost- recruitment fee and training are issued when the existence of the turn of the employees.


6. Meet government regulations.

Factors affecting the magnitude of the Compensation

Entitled Human resources management suggests that his little big compensation is affected by several factors. Factors affecting the magnitude of such compensation are as follows:

1. The level of cost of living


2. The level of Compensation that apply in other companies.


3. The level of the company's ability


4. The type of work and his little big responsibility


5. The applicable legislation


6. The Role of the Trade Unions.