Compensation Management Planning

Meaning & Definition

Compensation Management Planning is the way of designing and managing the salary structure and providing benefits, incentives, and rewards to employees in a way that is fair and strategic. The Compensation Management Planning process aligns an organisation’s employee compensation with performance, market standards, budget, and business goals while also providing equity internally as well as complying with government regulations.

Importance of Compensation Management Planning

• Provides employees with pay that is equitable in comparison to that of other organizations
• Enables organizations to attract, energize and retain skilled employees.
• Links pay decisions to both performance and business objectives.
• Assists with managing the company’s budget and developing a salary plan.
• Enhances pay structure transparency and consistency.

Applicable Regulations & Policies

There is no one law related to compensation planning in India, which must be compliant with certain things, including minimum wage laws, the payment of wages law, the equal remuneration law, income tax laws, and any statutory requirements for PF, ESI, gratuity or other benefits.