WEB BASED COMPENSATION AND PLANNING

Nowadays, organizations faced with the complexities of creating and administering compensation system are increasingly turning to technology for help in order to make a better management in compensation. In additions, compensation is one of the most complex topics in HRM. Online compensation represents a web that enable an organization to gather, store, manipulate, analyze, utilize, and distribute compensation data and information.

            The compensation system includes two different components which are fixed compensation and variable compensation. Fixed compensation is bonuses, pay wages, merit pay/cost of living adjustments, and equity adjustments.  Bonuses include sign-on bonus, referral bonus, spot bonus reward and retention bonus. Meanwhile pay wage is the basic cash compensation that an employer pays for work performed. Some pay system set based wage as a function of the skill or education an employee possesses. Merit pay/ cost of living adjustment is a periodic adjustment to base wages may be made on the basis of changes in what other employers are paying for same work, changes in the overall cost of living, or changes in experience or skill. Equity adjustment is intended to address critical and /or unusual pay administration issues and an equity increase is an adjustment to an employee’s salary. Variable compensation is individual incentives plan, group incentives plan, profit sharing plan and productivity gain sharing plan.

            Compensation programs must also meet federal and state statutory and regulatory requirement. For instance, the Office Federal Contract Compliance Programs (OFCCP).  It requires annual evidence of nonbias with respect to race and gender for similarly situated employee groups (SSEGs) and requires multiple linear regression analyses as evidence. Compensation can be seen manage in a typical data input typical report and data outflows. Compensation data inputs include internal (job, people and organization unit), external (market survey data and information on rewards practices) and generated data. The combination of internal and external will make the result better. Meanwhile in the typical report the most common reports include budget reports to managers showing how their actual compensation cost compare with the projected costs. Each employee will be provided with an annual compensation report showing the total amount of money spent by organization on employees in all aspects of compensation. A data outflow is the primary data outflow from the compensation modules to payroll. Managers will preparing budgets draw on compensation data as they projects costs over the next budget period. So it is important to have web based compensation planning because it will benefits the organization in preparing their budget effectively and precisely in future.

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