Compensation Policy Design

Compensation Policy Design

Compensation Policy Design

Key characteristics for success of incentive programmes

  • Clarity
  • Clear rules
  • Organisational motives should be clear
  • Easy to understand
  • Easy to monitor
  • Unambiguous measurement mechanism
  • Communicated properly and timely

Synthesis with business strategy

  • All organisational factors must pull together
  • Reinforce longer term strategy – not short term objectives
  • Design incentive schemes based on crucial measures
  • Mutuality with shareholders
  • Ensure high total remuneration for high performance

Motivational

  • Communicate pre-arranged sum of money linked to achievement of targets
  • Meaningful payments – perceived value (Weber’s Law)
  • Targets : stretching but achievable
  • Fair and equitable
  • Reward improvements – progressive change
  • Ownership :  mutually agreed targets – performance contracting
  • Monitor results and report on progress
  • Provide management development, coaching and counseling

Conditions of Employment

These are statutory conditions set out in the Malaysian Employment Act 1955, that companies must follow adhere to Companies may exceed these statutory conditions by providing more attractive and motivating working conditions.

Discretionary Benefits

These are extra employment benefits that are provided in order to motivate employees to build a career within the organization.

These benefits are usually designed to recognize loyalty to the organization.

Perks

These are extraordinary and attractive benefits that are usually provided exclusively to the top-level executives. They are meant to be competitive in order attract and retain superior performing top management executives.

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