Compensation Management is more than just the means to attract and retain talented employees. In today’s competitive labor market, organizations need to fully leverage their human capital to sustain a competitive position. This requires integrating employee processes, information and programs with organizational processes and strategies to achieve optimal organizational results.

Compensation Management programs cover: 

·         Competitive Offers

·         In-Band Adjustments

·         Market Data 

·         Overtime (FLSA) 

·         Pay Strategy 

·         Pay Structure 

·         Role Changes

There exists a mere line which connects the performance of the employee taking compensation as a motivational tool in the organization. The below mentioned explains the theory of Herzberg which connects the same.

Herzberg talks about "hygiene" and "motivational" factors that impact on an employee’s job satisfaction. The "hygiene" factors relate to the routine basics such as:
* salary
* benefits
* work environment, etc

and the motivational factors include such things as:
* quality of leadership
* team dynamics
* level of autonomy for the worker
* recognition and acknowledgement of achievements
* congruence between employee and organisational values, etc…

This is a very quick summary, but the theory makes sense as a whole.

Let us assume that many of us know examples of highly paid employees who are de-motivated and unhappy because they feel that their influence or autonomy in an organization is curtailed, or who are out of synch with organizational values. I think this is why poorly implemented significant change processes often result in an aftermath of unhappy employees, who regardless of compensation and benefits, pine for the "good old days".

Herzberg's theory also gives some level of explanation for why individuals will commit to a project of personal interest, often for next to no income, because they can freely exercise autonomy, creativity and influence in shaping the project as they believe it should be shaped.

I'm reminded of the story of the early Bill Gates, who with his long haired adolescent buddies worked night and day in their parents' sheds working on their IT visions. At the time, it wasn't money that kept them going, but a belief in what they were doing, and a sense that they could have an impact in the new world.

At a personal level, I am at a stage of life where money and prestige are equally important to me than a belief in what I am doing, and some capacity to control my destiny as well as make a contribution that I value.

So in order to meet the priorities being laid before me both at the domestic end and the organizational end, I need the certain expected level of the monetary benefits which could not only motivates me to continue the services with the organization but also sustain the expected level of living for myself.