What is meant by compensation function of Human Resource Management? Explain its activities.

Meaning of Compensation Function — The compensation function of Human Resource Management refers to providing equitable and fair remuneration to employees for their contribution to the attainment of organisational objectives.

Activities of the Compensation Function:

1. Job Evaluation — Job evaluation is the process of determining the relative worth of a job. Through systematic methods such as ranking, classification, point method and factor comparison, the value of each job in the organisation is assessed in relation to others.

2. Wage and Salary Administration — It implies developing and operating a suitable wage and salary programme. Wage and salary surveys are conducted to determine the prevailing wage and salary structure for various jobs in the organisation, both internally and in comparison with other companies. It includes setting basic pay, allowances, deductions and revisions.

3. Bonus — Bonus involves payment of bonus under the Payment of Bonus Act, 1965, as well as non-statutory bonus and other incentives. Bonus is an additional payment given to employees over and above their wages and salaries. Statutory bonus is a legal requirement, while non-statutory bonus and other incentives reward employee performance.