Objectives of compensation

Compensation has some important objectives. To achieve, these objectives a well conceived compensation scheme or plan may be established. These objectives are mentioned in the following point.

1. To be legal: It must get approval from the govt. or top management in the organization.
2. To be adequate: Compensation must be sufficient so that needs of the employees are fulfilled substantially.
3. To be Motivational: Compensation must increase the level of motivation and job satisfaction of the employees.
4. To be equitable: Compensation policy should be declared in such a way so that no discrimination can be observed.
5. To provide security: Employees must have guarantee of getting wages or compensation regularly without any break.
6. To be cost benefit effective: The organization must make a balance between cost for giving compensation and benefits to be accrued from the employees.

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