When you are setting wages for your employees there are many

factors to consider. Their compensation should be determined by more

than just whether they can work for you or not.
You need to make sure that you are considering what compensation
factors will affect those that work for you. You have to remember that
employees are going to go where it is going to benefit them most. That
means that you need to be able to make a good offer if you want them
to work for you.
Here are a few ideas for compensation factors to consider. For each
business there will be different applications, so not all of them are
right for your business.
What type of business you have. f you are a retail
store then commission will work great, but if you are a
production company then sales won!t affect many of your
workers. The different departments and divisions within the
business will make a difference too. The waitresses will be able
to collect tips but the cooks aren!t out with the customers to be
tipped.
The list of responsibilities and duties that are expected of
the employee. "t the bottom of the food chain there will be less
responsibility, if the person that just got hired is making the
same as the supervisor over them, but the responsibilities are
different, you might find you have some upset supervisors. "s
their job re#uirements increase there should be more
compensation given.
The time and effort that is put into the job. You will find that
some employees have a drive to do everything they can to give
it their best. $thers will be more inclined to take the minimum
workload and be done with work the second the clock tells them
it is okay. For those employees that volunteer to do more and
that give a great effort, there should be more compensation. f
you are looking for committee members to put together a
presentation, give them e%tra pay for the time they put into it.
On that same note, you will find that some people are
picking up the slack from those that are just there to do
the least they can. For those that are taking on e%tra and
doing all they can to make up for those that don!t care, there
should be a reward. They should be recogni&ed for their efforts
and compensated likewise.
When an employee is hired look at their education. f they
have an accounting degree and you are looking for a financial
adviser or an accountant, then you should be willing pay a little
more for their knowledge. You will have applicants that come in
under and over #ualified, make sure that you have enough
compensation budgeted that you can hire the person with the
right knowledge for your company.
Look at their work history. f they have years of e%perience,
they should be compensated. Those years help you to have that
much more of an advantage, adding their education to their
e%perience you may have someone that can make a big
difference in your company. "lso, if you are hiring even for the
smallest job, then you need to know that they are going to be
with you for at least a good amount of time. t is e%pensive to
train, so if you can reward them for being at their past jobs for
an e%tended amount of time then you might find a loyal
employee.
'emember that happy employees are the only way to keep a business
running in the right direction.
(orporate business strategy
)(orporate H'* strategy
)+emand and ,upply of human talent
)$rgani&ation values
)*arket 'ates
)ndustry Trends
)-erformance 'elated
)Fle%ibility . responding to changes.
)*otivation oriented
)Work related
)-roductivity based
)/udget factor
)(ompetence based
)(ontribution factor
)$rgani&ation grade structure
)0ob evaluation 1 relative si&e of jobs 2
)3on financial benefits
)4mployee benefits.
)nternal job value.
)4%ternal job value.
)-erceived value of an employee at a given time.
)"ffordability.
)Trade 5nion factor.
-erformance appraisal system 6 (omponents of performance appraisal systems are
directly related with reward system. -ermonace appraisal system is not only a direct
projector of performance by an individual during the year but accounts for so many
other parameters such as 7eadership 8ualities
(ommunication
-ersonal "ppearance9 Ways of +ressing up:
"bsenteeism
Health concisiousness
'elationship with pears.
,ystem adoption and understanding the systems.
,elf *otivation.
You can highlight combination of above parameters with individual performance and
evolve a system of rewarding the employee. " self motivated employee with good
personal "ppearance and low absenteeism rate can be rewarded for these
parameters.
;.(ompany commitment 6 You make number of combinations but if management
commitment is not there , then innovative systems will never come into e%istence. n
fact it is commitment of company . management to promote innovative ways. These
ways are to be critically evaluated before implementation. /usiness simulations if
available may be tried to work out the nearest possible results. ,W$T analysis is
re#uired to be done very carefully to visuali&e the impact of reward. For real good
innovation again if commitment to promote the same is there only then
implementation will succeed else results may differ.
<. *inimising the /ias factor 6 /ias factor is a stigma on innovative practices. You can
not eliminate this but by minimising the bias factor , one can achieve the objective of
innovative system.
=. "vailability of resources 6 For implementation of any system one has to have
resources for the same. e.g you want to pay 's.>???.?? as one time reward to an
employee for his low "bsenteeism rate, you should have resources to pay that. f
resources are not available the morale which you want to improve will not be as
much possible as you desire to be.
Internal
Corporate philosophy
Corporate mission
Business strategy
Human resources philosophy and strategy
Total rewards philosophy and strategy
Corporate culture
Shareholder expectations
Corporate structure
Costs/resource availability

External
Community culture
Competition
Economics
Industry characteristics
Labor maret
Legal/regulatory
Technology
!lobali"ation