Benefits of Ideal Compensation System

• An ideal compensation system will have positive impact on the efficiency and results produced by employees. It will encourage the employees to perform better and achieve the standards fixed.

• It will enhance the process of job evaluation. It will also help in setting up an ideal job evaluation and the set standards would be more realistic and achievable.

• Such a system should be well defined and uniform. It will be apply to all the levels of the organization as a general system.

• The system should be simple and flexible so that every employee would be able to compute his own compensation receivable.

• It should be easy to implement, should not result in exploitation of workers.

• It will raise the morale, efficiency and cooperation among the workers. It, being just and fair would provide satisfaction to the workers.

• Such system would help management in complying with the various labor acts.

• Such system should also solve disputes between the employee union and management.

• The system should follow the management principle of equal pay.

• It should motivate and encouragement those who perform better and should provide opportunities for those who wish to excel.

• Sound Compensation/Reward System brings peace in the relationship of employer and employees.

• It aims at creating a healthy competition among them and encourages employees to work hard and efficiently.

• The system provides growth and advancement opportunities to the deserving employees.

• The perfect compensation system provides platform for happy and satisfied workforce. This minimizes the labour turnover. The organization enjoys the stability.

• The organization is able to retain the best talent by providing them adequate compensation thereby stopping them from switching over to another job.

• The business organization can think of expansion and growth if it has the support of skillful, talented and happy workforce.

• The sound compensation system is hallmark of organization’s success and prosperity. The success and stability of organization is measured with pay-package it provides to its employees.