HUMAN RESOURCE MANAGEMENT

SEMINAR REPORT
ON

INNOVATIVE PRACTICES IN COMPENSATION MANAGEMENT

Submitted To: Ms. Vinitha Dept. of Management Science MESCE

Submitted By:Shafin P (50) S2 MBA

INTRODUCTION
Compensation management is a key activity for supporting workforce performance and talent management processes. Determining and providing the right compensation for each person, whether it involves base or merit pay or variable pay and incentives, is critical to being able to attract and retain productive members of the workforce, employees and contractors alike. Today, the activities and systems that support compensation for executives, variable pay and rewards for those in sales, field service and contact centers, as well as stock and other incentive programs, are diverse and complex. As organizations consider advanced practices such as pay for performance and talent management, many are finding they need a comprehensive and more strategic approach to compensation. The growing understanding of the need to recruit and retain quality staff has added to the concern over how to structure compensation policies and programs to be fair and competitive. Incentive plans and other innovative compensation and human resources practices are becoming critical elements in the organizational strategy. Compensation management is a central content of human resources management in modern enterprise. With the increasing changes of inside and outside business environment of the enterprise, it has flung down a bigger challenge to compensation management. It has a vital significance on how to motivate the employee through innovation in compensation management. Innovation in compensation management effectively motivates the employee and achieves sustainable development of modern enterprises.

INNOVATIVE COMPENSATION PRACTICES

Innovative compensation practices encompass cash compensation and recognition plans. The following are examples of innovative cash compensation or recognition plan options: Individual incentives Team or group incentives Bonuses Spot awards Special cash recognition Special non-cash recognition

Guidelines for Implementing Innovative Compensating Plans:The following guidelines provide considerations for nonprofit organizations which may be interested in implementing an innovative compensation plan. 1. Nonprofit organizations should first conduct an assessment to determine the appropriateness of innovative compensation to their culture and organization. This assessment should focus on the objectives to be achieved through implementing an innovative compensation program, what motivates staff, the opinions and views of members, constituents, volunteer leaders, and the financial resources available. 2. Any innovative compensation program should be viewed as part of a total approach to compensation and carefully integrated into the design of that program. A market analysis of current compensation levels related to the jobs in the organization should be conducted in the early stages or prior to developing a program. 3. The innovative compensation program, especially management incentive programs that provide significant opportunities for financial rewards, should be clearly tied to performance. The program should demonstrate the achievement of overall organization objectives in finance, program, development, client service, membership, public affairs, government relations, community relations, and any other areas deemed important to the organization. 4. The innovative compensation program should include both quantitative and qualitative criteria.

5. Organizations should consider pilot testing an innovative compensation program on a selected group of staff before introducing it to all staff. More than one innovative compensation program should be considered, especially in larger organizations. The majority of nonprofit organizations in the survey had implemented at least two types of programs. 6. Innovative compensation programs should be well communicated to staff and used as a vehicle to announce the success of employees, teams, and the organization.

CONCLUSION
If a formal management incentive program is not an option because of our size or limited budget resources, we may wish to consider the adoption of certain innovative compensation programs which are not very costly and can have a beneficial impact on employee morale. These include non-cash recognition programs, cash recognition programs such as spot awards, flextime/staggered hours, and a flexible spending account. Based on our experience, many of these programs are highly valued by employees since they provide flexibility. These plans incur little or no cost to the organization. Expert compensation and legal advice may be needed and should be considered by nonprofit organizations before implementing innovative compensation plans.