Cuya, Aubrey A.

Reaction Paper

Reference: Reefear Ajang. “Human Resource Management: Reward and Compensation.” LinkedIn,
07 September 2014, https://www.slideshare.net/reefearajang/human-resource-management-reward-
and-compensation.

HUMAN RESOURCES COMPENSATION

In an organization, each employee’s performance measurement should reflect the

organization’s business strategy and financial goals. Likewise, compensation should respond to the

employee’s performance level and his/her contributions to the organization’s success. Given these

premises, in order to attract, maintain and retain good, efficient, motivated, and high-performing

employees, the management has to implement an effective reward and compensation systems align

with objective, outcome-based evaluations of employee performance.

The following are the criteria for one to be regarded as an effective compensation policy:

adequate, equitable, balanced, cost-effective, incentive-providing, and compliant with the rules and

regulations in accordance with the law. Total compensation package is equal to the sum of

remuneration elements namely salaries, benefits, incentives and allowances.

Compensation and rewards are the driving forces of the employees’ motivational lives in an

organization. The most common component of compensation is direct compensation which includes

salary and wages that are frequently received by the employees for the services rendered for a certain

period. While some benefits and perquisites have monetary value, indirect compensation is also

important to be put in place as it enhances the quality of work-life of the employees. Example of

these non-monetary benefits are organizational culture, intrinsic value, and career opportunity.

Truth to be told, people behave in accordance with the reinforcements they get as response to

their action (past or future). There is often a trade-off between cost and benefits when it comes to

compensation policy. I say, like office furniture and fixtures and equipment are important in
achieving company’s goals and objectives, the people working behind its every success are also

worth every cent.