Strategic Human Resource Management

Strategic plan is the ability of an organization to plan how it intends to utilize its internal
strengths and weakness based on environmental opportunities and threats in order to meet its
objectives and competitive advantage.
Strategic management is the ability of an organization to identify and execute its strategic
plan by matching the organization's capabilities with the demands of the environment.
SHRM: formulating and executing human resource policies and practices employees need to
produce desired competence and behaviour the company needs to meet its strategic aims.
HR priority in the 5 geographic
-employee engagement
-performance management
-change management
-talent management
Employee engagement relates to the level of commitment employees have to an origination,
it includes/measure the employee productivity, work ethics and desire to stay in the
organization.
SHRM is used to bridge the gap between organization goals and organizational effectiveness.
-reward and recognition: reward and recognition programs are designed strategically to
motivate and engage employees in ways that contribute directly to organizational goals.
Aligning rewards with key performance indicators and strategic objectives ensures that
employees are recognized for behaviors and achievements that drive the organization
forward.
-promotion: involve identifying and advancing individuals whose skills and competencies
align with the organization's strategic needs. SHRM guides promotion decisions based on not
only individual performance but also the potential for contributing to the long-term goals and
success of the organization.
-communication: Clear and transparent communication ensures that employees understand
organizational goals, strategies, and their role in achieving them. Strategic communication
fosters a shared understanding of the company's vision, creating alignment and commitment
among the workforce.
-talent management: as a means of acquiring, developing, and retaining employees who
possess the skills and competencies critical to achieving strategic objectives. This includes
strategic workforce planning, succession planning, and initiatives to enhance the skills of the
workforce in line with organizational needs.
SHRM importance
- Able to identify and appropriately utilize the knowledge, skills and competencies of
employees which competitors are not able to copy
- encourage an organization to be proactive
-focus on the gaps between the organization current and desired states.
- SHRM enables organizations to identify and leverage the unique knowledge, skills, and
competencies of their employees. This focus on distinctive competencies creates a
competitive advantage that is difficult for competitors to replicate. By aligning human
capital with strategic goals, organizations can develop capabilities that set them apart in
the marketplace.
- SHRM encourages organizations to adopt a proactive stance rather than a reactive one.
Instead of responding to challenges as they arise, SHRM involves anticipating future
trends and proactively preparing the workforce to meet evolving business needs. This
forward-thinking approach helps organizations stay ahead of the competition and adapt
to changes in the external environment.
- SHRM directs attention to the gaps between an organization's current state and its
desired future state. By assessing these gaps, organizations can strategically plan for
talent acquisition, development, and deployment. This strategic focus ensures that HR
practices are aligned with broader organizational objectives, fostering a more cohesive
and purposeful approach to human resource management.
- SHRM contributes to enhanced organizational performance by aligning human capital
with business strategy. When employees' skills and efforts are directed toward achieving
strategic objectives, it leads to improved overall performance, increased efficiency, and
sustained success.
Strategic Human Resource Management
 Comparing the current HR inventory – numbers, characteristics, and practices – with
future strategic requirements.
 Developing a HR strategy based on the differences between the current inventory and
future requirements
 Implementing the appropriate HR practices to reinforce the business strategy and to
attain competitive advantage. To do this it is important that HR further develops the
following:
❖ Staffing Strategy: Focuses on acquiring and retaining the right talent, ensuring that the
organization has the necessary skills and competencies to achieve strategic goals.
❖ Developmental Strategy: Emphasizes training, skill development, and career planning to
enhance the capabilities of the workforce and prepare them for future roles.
❖ Compensation Strategy: Involves designing a compensation system that aligns with
organizational goals, attracts and retains talent, and motivates employees to contribute to
strategic objectives.
❖ Workforce composition: Addresses the structure of the workforce, including
considerations related to diversity, skills mix, and flexibility to meet changing business
needs.
 JOB ANALYSIS

Also referred to as the "anatomy of the job" it includes the process of collecting interpreting,
reporting important information about the nature of a specific job.
OR
The procedure for determining the duties and skill requirements of a job and the kind of
person who should be hired for it.
Importance:
-performance appraisal
-job specifican process
-job description process
-career planning and development
-strategic staffing

Job description- A list of a job’s duties, responsibilities, reporting relationships, working

conditions, and supervisory responsibilities—one product of a job analysis. (allows you to
know what the job requires)

Job specification- A list of a job’s “human requirements,” that is, the requisite education,
skills, personality, and so on—another product of a job analysis. (allows you to know the
person you need for the job)

Importance/uses of Job analysis

COMPENSATION (such as salary and bonus) usually depends on the job’s required skill
and education level, safety hazards, degree of responsibility, and so on—all factors you
assess through job analysis.
TRAINING The job description lists the job’s specific duties and requisite skills—thus
pinpointing what training the job requires.
PERFORMANCE APPRAISAL A performance appraisal compares an employee’s actual
per formance of his or her duties with the job's performance standards. Managers use job
analysis to learn what these duties and standards are.
RECRUITMENT AND SELECTION Information about what duties the job entails and
what human characteristics are required to perform these duties helps managers decide what
sort of people to recruit and hire.
THE JOB ANALYSIS PROCESS

1. Job Identification: this step -List Positions: Identify and list all the different positions or
roles within the organization. This involves creating a comprehensive inventory of the
various jobs that contribute to the functioning of the organization. List Jobs:Go beyond just
job titles and list the specific tasks, duties, and responsibilities associated with each position.
This provides a more detailed understanding of what each job entails. Create Job
Titles/Categories (Job Family):Group similar positions into broader categories known as job
families. Job families help in organizing and managing various roles within the organization
by highlighting commonalities in skills, responsibilities, or functions. This categorization an
simplify HR processes such as compensation, training, and career development.

2. Collection of Data on Job Duties and Responsibilities-

Ascertain information on:
- Specific duties
- Responsibilities
- Essential functions
How to Collect data?

Participant Diary/Logs
Another method is to ask workers to keep a diary/log; here for every activity engaged in, the
employee records the activity (along with the time) in a log. Some firms give employees
pocket dictating machines and pagers. Then randomly during the day, they page the workers,
who dictate what they are doing at that time.

Observation
Direct observation is especially useful when jobs consist of observable physical activities—
assembly-line worker and accounting clerk are examples. However, it’s usually not
appropriate when the job entails a lot of mental activity (lawyer, design engineer). Nor is it
useful if the employee only occasionally engages in important activities, such as a nurse who
handles emergencies. Reactivity—the worker’s changing what he or she normally does
because you are watching—is another problem.

The Structured Interview Technique

This involves a systematic and standardized set of questions that are asked of job incumbents,
supervisors, or experts. Questions are designed to elicit detailed information about job duties,
responsibilities, and the context in which they are performed.
Advantages:
Provides a consistent and standardized approach.
Allows for in-depth exploration of specific areas.
Challenges:
May be influenced by the interviewer's interpretation of responses.

Structured Questionnaire Method:

The Structured Questionnaire Method involves the use of a standardized questionnaire
containing a set of questions related to job duties, responsibilities, and essential functions.
Questionnaires can be administered to multiple individuals, and responses are systematically
compiled for analysis.
Advantages:
Efficient for collecting data from a large number of respondents.
Standardization allows for comparability of responses.
Challenges:
Limited opportunity for clarifying responses in real-time.

3. DELINEATION OF ESSENTIAL JOB FUNCTIONS

Determine the intrinsic job functions
- Separate the tasks, duties and responsibilities that are core to the job.
- These are the reason why the job exists.
- Other job functions are considered to be non-essential/marginal job functions.
Intrinsic job functions are the fundamental tasks, duties, and responsibilities that are at the
core of a particular job. They represent the primary reasons why the job exists within an
organization. During this step, job analysts identify and separate the tasks and duties that are
central to the job from those that are peripheral or ancillary. Core tasks are essential for
accomplishing the primary purpose of the position. Essential job functions are those that are
indispensable for the job's successful performance and are directly tied to the job's primary
objectives. Non-essential or marginal job functions are secondary tasks that, while they may
contribute to the overall role, are not critical to the job's core purpose. The delineation of
essential job functions helps clarify the reasons why a particular job position exists in the
organization. It provides a focused understanding of the primary contributions the job makes
to organizational goals.
Delineating essential job functions is often essential for legal and compliance purposes,
particularly in the context of accommodations for individuals with disabilities under the
Americans with Disabilities Act (ADA).
Knowing the intrinsic job functions is critical for designing effective job roles and for
evaluating employee performance against the key responsibilities that contribute most
significantly to organizational success.
Understanding essential functions aids in resource allocation by focusing efforts and
resources on the most critical aspects of each job, ensuring optimal organizational efficiency.
4. DETERMINATION OF NEEDED HUMAN QUALIFICATIONS
▶ Assessment of skills, abilities, experience and other qualifications that are necessary for the
job.
▶ Difficult to do because they require much judgement, discretion and expertise on the part
of the individual performing the job analysis.
▶ Aim is to determine the minimally appropriate level of skills needed for successful job
performance
▶ Input typically comes from: -Managers/Supervisors (Problem: these persons describe the
ideal job rather than the successful job) -Employee in job role (Problem: They often overstate
the qualifications that are needed)
The determination of needed human qualifications in the job analysis process is a pivotal step
with far-reaching implications for effective human resource management. This phase
involves a meticulous assessment of skills, abilities, experience, and other qualifications
essential for successful job performance. Given the complexity of this task, it demands a high
level of judgment, discretion, and expertise from those conducting the job analysis. The
primary objective is to establish the minimally appropriate level of skills required, setting a
baseline for performance standards. However, this process is not without challenges. Input
from managers and employees is crucial but comes with inherent biases—managers may
describe an ideal job, and employees might overstate qualifications. Striking a balance and
obtaining accurate information is paramount. The identified qualifications serve as a basis for
efficient recruitment, training programs, performance appraisal, and even succession
planning. Furthermore, ensuring legal compliance, particularly with Equal Employment
Opportunity regulations, is essential to guarantee that qualifications are job-related and
necessary for successful performance.
5. PREPARATION OF JOB DESCRIPTION AND JOB SPECIFICATION
▶ Written documents that highlight
a. The duties, responsibilities and functions that were identified in Stage 1
b. The skills, abilities and other qualifications identified in Stage 4
The preparation of job descriptions and job specifications is a critical component of the job
analysis process, encapsulating the identified duties, responsibilities, functions, and
qualifications. Job descriptions serve as comprehensive documents outlining the specific
tasks, roles, and functions associated with a particular job, summarizing the insights garnered
in the initial stages of job analysis. This includes delineating intrinsic job functions and
essential duties. In parallel, job specifications elucidate the human qualifications required for
the job, integrating the findings from the determination of needed human qualifications in
Stage 4. These specifications detail the essential skills, abilities, and other qualifications
deemed necessary for successful job performance. In essence, these written documents not
only provide clarity for individuals currently occupying the role but also serve as invaluable
tools for recruitment, training, and performance evaluation. They form a crucial link between
the organizational goals and the individuals tasked with achieving them, contributing to the
alignment of workforce capabilities with job requirements.
BY - PRODUCT OF THE JA PROCESS-JOB DESCRIPTION
Good job descriptions are hard to write, as they must be specific, complete, accurate, concise,
meaningful and readable. It is critical that the individual preparing the job description:
i. Have an understanding of the content that is needed.
ii. Be aware of the manner in which the information is to be presented.
iii. Have effective writing techniques
Crafting effective job descriptions is a challenging task, as they must encompass qualities
such as specificity, completeness, accuracy, conciseness, meaningfulness, and readability.
Those tasked with preparing job descriptions must possess a deep understanding of the
content required, ensuring that the descriptions accurately reflect the identified duties,
responsibilities, and functions from the earlier stages of the job analysis. Additionally, the
individual must be conscious of the manner in which the information is presented, aiming for
clarity and coherence.
BY - PRODUCT OF THE JA PROCESS-JOB SPECIFICATION
Job specifications outline the minimum qualifications, such as education, experience, or skills
that a person should have in order to satisfactorily perform a job.
- Job specifications should always reflect the minimum rather than the ideal qualifications for
a job.
- Organisations have a tendency to overstate qualifications. Sometimes special employee
groups are affected.
- Compensation costs may also increase when qualifications are overstated.
- Job vacancies will be harder to fill.
Job specifications, as a by-product of the job analysis process, serve as crucial documents
outlining the minimum qualifications required for successful job performance. These
specifications detail essential criteria such as education, experience, and skills that an
individual should possess to fulfill the job's requirements. Importantly, job specifications
should consistently reflect the minimum rather than ideal qualifications, aligning with the
practical necessities of the position. Organizations often have a tendency to overstate
qualifications, potentially impacting specific employee groups. Overstating qualifications can
lead to increased compensation costs and may pose challenges in filling job vacancies, as the
ideal qualifications may be unrealistic or unnecessary for effective job performance. Striking
a balance between setting realistic minimum requirements and avoiding unnecessary
overqualification is essential for organizations to attract suitable candidates and maintain a
cost-effective and efficient recruitment process.
 TRAINING and DEVELOPMENT

An orientation typically includes information on employee benefits, personnel policies, the

daily routine, company organization and operations, safety measures and regulations, and a
facilities tour.
Training means giving new or current employees the skills they need to perform their jobs.
Employers today must make sure that their training programs are supporting their firms’
strategic goals.
The Training process:
Training programs consist of four steps.
1. Needs analysis, identify the specific knowledge and skills the job requires, and
compare these with the prospective trainees’ knowledge and skills. This step is
foundational, as it identifies the specific knowledge and skills required for job roles.
By comparing these requirements with the current skills of prospective trainees,
organizations can pinpoint performance gaps and tailor training programs to address
specific needs. This ensures that training efforts are targeted and directly contribute to
enhancing job performance.
2. Instructional design, formulate specific, measurable knowledge and performance
training objectives, review possible training program content (including workbooks,
exercises, and activities), and estimate a budget for the training program. Formulating
specific, measurable training objectives is critical for guiding the development of the
training program. This step also involves planning the content, materials, and
activities. A well-designed instructional plan ensures that training is structured,
focused, and aligned with organizational objectives. Estimating a budget helps in
resource allocation and cost-effectiveness.
3. Program Implementation, by actually training the targeted employee group using
methods such as on-the-job or online training. Implementing the training program
involves delivering the actual training to the targeted employee group. The chosen
methods, whether on-the-job or online training, should align with the nature of the
content and the needs of the participants. Effective implementation ensures that
employees acquire the desired knowledge and skills, enhancing their performance and
contributing to organizational success.
4. Evaluation, assess the program’s success (or failures). The evaluation step is crucial
for assessing the success or failures of the training program. It involves measuring the
effectiveness of the training in terms of meeting objectives, improving job
performance, and aligning with organizational goals. Evaluation results provide
valuable feedback for refining future training initiatives, ensuring continuous
improvement in the learning and development process.

Analyzing Training Needs

Task analysis is a detailed study of the job to determine what specific skills the job
requires.
 Performance analysis is the process of verifying that there is a performance deficiency
and determining whether the employer should correct such deficiencies through training
or some other means (like transferring the employee).
The heart of performance analysis is determining why performance is down. It is futile to
train an employee whose work actually is deficient because of insufficient motivation.
Distinguishing between can’t-do and won’t-do problems is therefore crucial.

Training Methods
• On-the-Job Training
• Apprenticeship Training
• Informal Learning
• Job Instruction Training
• Lectures
• Programmed Learning
• Teletraining and Videoconferencing
• Computer-Based Training (CBT)
• Simulated Learning
• Internet-Based Training
• Learning Portals
Train the trainers themselves (often the employees’ supervisors), and provide the training
materials. Trainers should know, for instance, the principles of motivating learners.
Because low expectations on the trainer’s part may translate into poor trainee performance,
supervisors/trainers should emphasize the high expectations they have for their trainees’
success.
Many jobs (or parts of jobs) consist of a logical sequence of steps that one best learns step-
by-step. This step-by-step training is called job instruction training (JIT). the step-by-step
graphical instructions UPS uses to train new drivers in how to park their trucks and
disembark.
Lifelong learning means providing employees with continuing learning experiences over
their tenure with the firm, with the aims of ensuring they have the opportunity to learn the
skills they need to do their jobs and to expand their horizons.
Many employees have learning disabilities that make it challenging to read, write, or do
arithmetic. The current emphasis on teamwork and quality requires that employees read,
write, and understand numbers. Employers use both public and private sources to provide
literacy training for their workers.
Training programs consist of four steps.
1. In the needs analysis step, identify the specific knowledge and skills the job requires,
and compare these with the prospective trainees’ knowledge and skills.
 2. In the instructional design step, formulate specific, measurable knowledge and
performance training objectives, review possible training program content (including
workbooks, exercises, and activities), and estimate a budget for the training program.
3. Implement the program, by actually training the targeted employee group using
methods such as on-the-job or online training.
4. In the evaluation step, assess the program’s success (or failures).
Management development is any attempt to improve managerial performance by imparting
knowledge, changing attitudes, or increasing skills. The management development process
consists of
(1) assessing the company’s strategic needs (for instance, to fill future executive openings or
to boost competitiveness),
(2) appraising managers’ current performance, and then
(3) developing the managers (and future managers).
Succession planning refers to the process through which a company plans for and fills
senior-level openings.
Steps in the Succession Planning Process
1. Anticipate management needs
2. Review firm’s management skills inventory
3. Create replacement charts
4. Begin management development

Managerial on-the-job training methods include job rotation, the coaching/understudy

approach, and action learning.

Behavior modeling involves (1) showing trainees the right (or “model”) way of doing
something, (2) letting trainees practice that way, and then (3) giving feedback on the trainees’
performance.

Faced with the need to change, managers can change one or more of five aspects of their
companies—their strategy, culture, structure, technologies, or the attitudes and skills of the
employees.

Adjusting the strategy ensures that the organization remains relevant and competitive. It
allows managers to respond to market trends, customer needs, and competitive pressures,
driving sustained success.

Managers can influence and change organizational culture by fostering a climate that
supports innovation, collaboration, and adaptability. A positive and adaptive culture is crucial
for facilitating change and ensuring that employees embrace new initiatives. A cultural shift
can enhance employee morale, productivity, and overall organizational performance.

Organizational structure refers to how tasks, roles, and responsibilities are organized within
the company. Managers can reconfigure the structure by changing reporting relationships,
introducing cross-functional teams, or altering departmental divisions. Adjusting the
organizational structure enhances agility and responsiveness. It streamlines decision-making
processes, improves communication, and facilitates a more efficient use of resources..

Embracing technological advancements is crucial for staying competitive in a rapidly

evolving business landscape. Technological changes can lead to improved productivity,
reduced costs, and enhanced innovation.

Employees play a central role in the success of any organizational change. Enhancing their
skills and cultivating a positive attitude toward change ensures that they can adapt to new
challenges, contributing to the overall success of the transformation.

Knowing how to deal with resistance to change is the heart of implementing an

organizational change program. Implementing change can mean either reducing the forces for
the status quo or building up the forces for change.

Lewin’s three-step change process.

• Unfreezing Stage
1. Establish a sense of urgency (need for change).
2. Mobilize commitment to solving problems.
• Moving Stage
1. Create a guiding coalition.
2. Develop and communicate a shared vision.
3. Help employees to make the change.
4. Consolidate gains and produce more change.
• Refreezing Stage
1. Reinforce new ways of doing things.
2. Monitor and assess progress.

Organizational development (OD) is a change process through which employees formulate

the change that’s required and implement it, often with the assistance of trained consultants.
 Compensation

Compensation refers to any payment given by an employer to an employee during their

period of employment. In return, the employee will provide their time, labor, and skills. This
compensation can be in the form of a salary, wage, benefits, bonuses, paid leave, pension
funds, and stock options, and more.

Compensation in Human Resource Management has 5 objectives.

 Ensure that employees are fairly compensated - This is an essential objective of

compensation in HRM. Employees should be paid based on the market value of their
job, as well as their skills, experience, and training. They should also be paid based on
their performance.
 Attract the right Employees - Another critical objective of compensation in HRM is
to attract the best talent. To do this, companies need to offer competitive salaries and
benefits packages. HR professionals must also be able to sell the company’s culture
and values to potential employees.
 Create a reward structure - create a reward structure that motivates employees to
perform at their best. This can be done through various methods, such as bonus
programs, commission structures, and stock options.
 Promote Loyalty - promote loyalty among employees. Employees are not just
looking for a high salary. They also want to feel like they are valued team members
and that their work is paramount to the company
 Adhere to legal compliance - The final objective of compensation in HRM is to
adhere to all legal compliance requirements. This includes things like minimum wage
laws, equal pay laws, and anti-discrimination laws.

Importance of Compensation:

 Attract Top Talent: Offering competitive compensation is instrumental in attracting

top talent to an organization. Skilled and high-performing individuals are often sought
after by multiple employers, and an attractive compensation package is a key factor
that can make an organization stand out in the job market. Competitive salaries, along
with other benefits and perks, create a positive first impression and can lure talented
professionals who seek recognition and fair compensation for their skills and
expertise.
 Increase Productivity and Profitablity : air and performance-based compensation
systems can motivate employees to enhance their productivity. When employees see a
direct correlation between their efforts and financial rewards, they are more likely to
be engaged and committed to achieving organizational goals. Improved productivity,
driven by a well-designed compensation structure, can contribute to increased
profitability. Motivated employees are more likely to go above and beyond in their
roles, leading to higher efficiency and better business outcomes.
 Boost Employee Loyalty: Compensation is a key factor in shaping employee loyalty.
When employees feel that they are fairly rewarded for their contributions, they are
more likely to develop a sense of loyalty and commitment to the organization.
Employees who feel valued and fairly compensated are less likely to seek
opportunities elsewhere. This reduces turnover rates, which can be costly for
 organizations in terms of recruitment, onboarding, and lost productivity. A stable and
loyal workforce contributes to a positive organizational culture and long-term success.

Maintaining a competitive compensation structure is essential for staying relevant in the job
market. Organizations that offer salaries and benefits in line with industry standards are more
likely to attract and retain top talent.

Compensation strategies should be aligned with organizational goals. Linking compensation

to performance metrics and strategic objectives ensures that employees are motivated to
contribute to the achievement of the company's mission and vision.

Compensation directly impacts employee satisfaction. When employees feel that they are
fairly compensated for their efforts and contributions, their overall job satisfaction increases,
leading to a positive work environment.

There are two main types of compensation: direct (financial) and indirect (financial & non-
financial)

Direct Compensation: refers to the money an employee receives for work done for a specific
duration like an hour, a week, a month, or a year.

 Hourly wages are wages often given to unskilled, semi-skilled, temporary, part time
or contract workers in exchange for time and labour
 A common form of compensation typically provided to employees in sales roles
(though not always). Commission is based on factors such as revenue and profit
margins.
 Companies may offer bonuses based on year-end results or individual goals. Bonuses
can be paid annually, quarterly or at the end of a project.
 These are benefits typically given to full time employees and skilled employees who
fill positions. Teachers, Accountants, retail etc. Houry wages and salries make up base
pay/ base salary

Indirect Compensation: a type of payment to an employee that doesn't involve directly

paying a wage or salary.

 Employee is offered ownership of the company through shares of stock. This is

usually found at start-up companies.
 Allows employees to purchase a set number of shares at a fixed price after a certain
time. Most companies require employees to work 5-10 years.
 Typical employee benefits include: health insurance, retirement plans, disability
insurance etc.

Workers’ compensation, commonly referred to as “workers’ comp,” is a government-

mandated program that provides benefits to workers who become injured or ill on the job
or as a result of the job.

Components of Compensation:
 Employees within an organization are subject to various benefits and organizations based
on employee skills, experience, performance, job level, etc. The different components of
employee compensation include basic pay, HRA, DA, special allowances, etc.

The basic pay is the basic salary withdrawn by an employee in an organization. It

depends on the company’s policies and the laws of the company. It is that part of the
salary that is taxed.

Accommodation or home rent allowances, Few companies provide their employees

with accommodation or home rent allowances. This is in addition to the paid salary. It is
generally calculated based on the basic salary obtained by an employee.

Employee Benefits

Employee benefits can be monetary, non-monetary, or both. Employee benefits help in

attracting and retaining the right talent in a company. These benefits can be paid time off,
medical insurances, etc.

• Medical Insurance
• Paid time Off
• Loyalty and retirement benefits

Perks of Compensation

In addition to benefits required by law, companies provide other benefits because they feel
socially responsible to their employees and opt offer them compensations beyond the law.
Such benefits are given to make their job more enjoyable. These types of employee benefits
are offered at the discretion of the employer or are covered under a labour agreement, so they
will vary from company to company. Some perks include:

• Dental Insurance: Offering dental insurance can contribute to employee

satisfaction and health, reducing the financial burden associated with dental
care and fostering a sense of well-being.
• Vision Care: Vision care benefits contribute to employees' overall health and
productivity by ensuring clear vision and reducing eye strain, which can be
particularly important for those who work on computers or perform detailed
tasks.
• Retirement Benefits: Retirement benefits support employees in planning for
their financial future and contribute to long-term employee loyalty. These
benefits are integral to overall financial well-being.
• Free Meals: Free meals contribute to a positive work environment, foster
social interactions among employees, and can enhance overall job satisfaction.
• Company Car: A company car can be a valuable benefit, reducing employees'
personal expenses related to transportation and providing convenience,
especially for those who need a vehicle for work-related tasks.
• Employee Discounts: Employee discounts promote a sense of value and
appreciation, contributing to employee satisfaction and engagement. They also
enhance the overall compensation package by extending benefits beyond the
workplace.
Disadvantages of Compensation

• Can lead to inequality: Compensation systems, if not designed and

implemented carefully, can contribute to inequality within the organization.
Disparities in pay between different roles, departments, or individuals may
lead to dissatisfaction and can negatively impact morale. It may create a
perception of unfairness, affecting the overall organizational culture and
employee relations.
• May encourage unethical behavior: compensation structures that heavily
emphasize individual performance and financial rewards may encourage
unethical behavior. Employees might be motivated to manipulate results or
engage in unethical practices to meet performance targets and secure bonuses.
It undermines the ethical foundation of the workplace and can have long-term
consequences.
• Can cause financial constraints: Financial constraints may limit an
organization's ability to invest in other areas such as training, development, or
employee benefits. It can also impact the overall financial health of the
organization and hinder its capacity for strategic investments or expansion.