Introduction and Overview of the article:
The article that was provided was based on the compensation plans that an organization creates according to the capability and competency of its employees. It states the path that the organizations have taken to change how the traditional compensation plan were formed in the older days to the strategy they now apply to allot the compensations and incentives to the employees. Compensation management is one of the most important function of the organization, keeping in mind both the parties, as it gives a push of motivation to the employees towards their work and commitment towards the organization, making them work more effectively and efficiently.
The draft gives an overview of what competencies are. Competency is actually the whole process on how things are done, rather than the outcome or result. It relates to the value that is added by each individual while performing any given task. It is further elaborated that there are three key categories of competency i.e. (a) organizational competency, that acts as a key factor in the success of an organization, making it competitive by figuring out the strengths and working more efficiently to enhance it; (b) job related competency, they vary from organization to organization, and from one task to another. At times job related competencies are a tool that can be used by HR managers for selection, building up the employee and allotting them the targets and goals and (c) personal competency include competency for growth, to learn, to lead and control. Personal competency further includes competencies such as interpersonal competencies, information oriented competencies and people management competency. Personal competency helps a person out show him/herself among a crowd of co workers.
Compensation is a reward that an organization may use for accomplishing the organization’s objective indirectly. In the older days what used to happen was that compensation was distributed with respect to the job rather than the person who is performing the job. But now, the scenario is completely inverse. Now, the salary and compensations are paid in accordance with the skills and competency of the employee, and they expect to be paid with respect to the proficiency that they show.
Compensation is now taking place as a strategic issue that is used in order to improve and enhance the future performance. Effective pay for performance has two parts; Compensation Management and Performance Management, but the real challenge for the HR management is to integrate both these processes.
The advantage of this method is that this will help creating a learning organization, as the employees would be empowered to take charge of their own training and growth as the employees are paid according to their skills and market value. And it will help in filtering the most potential employees and then retain them by giving compensations according to their skills.
Points of Agreement