Employee remuneration has different meaning for different people. For an employee, it means standard of living and class; for the employer it appends to the cost; and to the HRM the management of remuneration is a significant activity.

Employee compensation is an imperative as well as a complex subject for every manager of the organization. Hence it is significant to have a well-made compensation system.

Components of Remuneration

Remuneration is an element of both, monetary and non-monetary rewards; financially, in terms of cash and benefits received; non-monetary in terms of status, recognition, and esteem. Job evaluation is a method to decide the input of a position to an organization. It needs to be seen by the employee and organization, as just and impartial.

Good salary administration necessitates that the employees get financial recognitions for the contribution that they make. If the organization handles this inaccurately, or manipulates it in some way, the affect on the employee is noteworthy.

An average employee in an organization is likely to get numerous benefits. A distinctive remuneration of an employee comprises of wages and salary, perquisites, fringe benefits, incentives, and non-monetary benefits. They are as follows:

Wage and Salary: Wages signify the hourly rates of pay, and salary stand for the monthly rate of pay, despite of the number of hours worked by an employee. Wages and salary are subject to annual revisions, and depend upon the merit, seniority and nature of job.

Incentives: Incentives are paid additionally with wages and salaries. Incentive is the recompense for work of a satisfactory quality produced in addition to a specified quantity or standard. Incentives depend upon productivity, profit, sales, or cost reduction efforts. Incentives are the added financial motivation.

Fringe Benefits: This consist of benefits such as ESIS, provident fund, paid holidays, leave with pay, leave travel concession, pension schemes, gratuity, house rent allowance, medical care, accident relief, recreation, etc.

Perquisites: Usually these are given to executives and include a company car, furnished house, club membership, stock option plans, etc.

Non-monetary benefits: These comprise growth prospects, challenging job responsibilities, recognition of merits, comfortable working conditions, competent supervision, flexible time, and job sharing.