Course Intro CRS

Organizations today are becoming very sophisticated. The challenges associated with compensation are numerous. The Human Capital Resources are the major assets for any organization. Accordingly compensation management is about designing strategies and policies aimed at satisfying the workforce in order to retain critical staff in the organization. It is also necessary to attract well qualified and experienced personnel in order to create competitive advantages over competitors. The contract of Employment is governed by both the common law and statute. Human Resources personnel ought to understand the legal environment in which they operate such as the employment Act, workers compensation Act and the Trade Unions and Employers’ organization Act to mention but a few. In this course you will be introduced to various strategies ,policies and theories that could be utilized to achieve total compensation. We shall also deal with the procedures involved in formulating compensation strategy. Formulating a compensation strategy is not an event but a process. It involves both management and the workers. It is necessary to have a motivated workforce. Such a workforce is free from stress and is highly productive. Workers are motivated by different things as they operate at different levels. Maslow’s hierarchy of needs will be discussed at length in this module to help you understand the different needs of employees. The employment environment today is characterized by numerous benefits such as health and retirement schemes. We need to understand the role of such benefits in motivating employees. We also need to understand the costs associated with affording such benefits to employees. Accordingly we shall discuss the advantages of employee benefits to loath the employers and the employees. The process of coming up with appropriate pay structures involves carrying out compensation surveys in order to appreciate pay structures in the Industry concerned and the factors that effect pay differences. Compensation covers various aspects such as the wages and salaries paid to employees as well as benefits or non cash compensation.

The importance of compensation in Industrial relations can not be over emphasized. It maintains sound Industrial relations. It also helps in retaining and attracting qualified employees thus creating a competitive edge over competitors. Internal and external equity are critical aspects of any compensation system. Employees should be able to see fairness in the manner they are paid. The salaries should also compare favourably with those of other employees in other companies doing similar jobs. The area of compensation is arguably the most important and challenging aspect of Human resources management. This is so because human needs are dynamic and sometimes situational. It is not ease to understand what will motivate employees. It is thus advisable to consult and involve employees in crafting compensation strategies. Compensation strategies are critical for the overall success of all the organizational goals. Accordingly these strategies must feed into the overall goals of the organization. The human resources manager is thus a major player in crafting overall organizational strategies and goals. This course will help you understand the various issues at play in recruiting and retaining the right staff. It will help you appreciate what the Human resources Department needs to do and need not do in order to create a competitive advantage through people. We have included numerous activities and self assessment exercises through out this module to keep you engaged as you read through the module. We have provided suggested answers in all cases and we hope this will help you in your private studies.

Assessments You are going to do two assignments before you write the mock examination to prepare you for the final examination which will be written at the end of the course. The assignments have been designed in similar fashion to the final examination.

Resources This module is the primary book for all the information you need for purposes of the examination .You are advised to prepare your own notes from any other sources you might wish to consult. You can use any public library or the university of Botswana library for your further reading. The college shall arrange from time to time tutorials to be covered by BOCODOL Lecturers. You will be advised of the time table for these tutorials.

Mode of Study this module has been designed in simple English to help you study at home. All issues that you fail to understand would be clarified during tutorial discussions. You are advised however to stick to the suggested hours for studying each unit: Give; yourself time to go through each unit at least twice before attempting to answer the self assessment questions. We wish you the best of luck in your studies.

Course Structure
This course divided into the following units;

Unit 1: Introduction to Compensation and Reward System

Unit 2 : Components of a Pay Model

Unit 3 : Theories of Motivation and Reward System

Unit 4 : Internal Pay Structures

Unit 5 : Compensation Salary Levels

Unit 1: What is Compensation and Reward System?
There are many different terms used to define payment, which rewards the employee for making available to the employer time, skill, experience, brain power and effort which employees bring forward in differing proportions. This observation was made by Derek Torrington et, al 91), where he stated that these terms include “compensation, reward, income and remuneration and the payment is described in the form of pay, salaries or wages. The latter (wages) primarily referred to payment for manual workers, which entailed a method involving cash payment on a weekly basis. Salaries are paid to those of white collar jobs and consist of direct payments into banks on a monthly basis. In other circumstances, the conditions of employment differ between those on wages and salaries. However, there has been move towards harmonisation between wage and salaried employees.

The system of payments of employees can include direct elements – dependent on performance or time spent and indirect elements, i.e. fringe benefits. The latter are increasing in popularity. The direct elements of pay can be fixed or variable and may include basic pay, which does not vary, incentive payments, which are related to performance of the individual, over time payments, where work over the standard hours is paid at premium rates in accordance with contract terms and additional payments for such things as increased responsibility or working in difficult conditions, Derek Torrington et, al (1991). Allowances may also be paid for such things as travelling to and from work, when undergoing training, for meals and lodgings when working from home base.

This chapter provides an overview of compensation and reward management. The concept of compensation and reward management, its objectives, the differences between compensation and reward system and the different categories of compensation and reward system will be discussed. Reference will also be made to reward management policies and will conclude by discussing factors that affect the development of reward policies.

Unit Outcomes
Learners should be able to;
 * Define Compensation and Reward System and related terms


 * Describe Fair and Non-discriminatory Compensation


 * Discuss Unfair Compensation


 * Explain the relationship between income, remuneration and pay


 * Discuss financial and no-financial returns as forms of pay

Unit Structure
This unit is divided into the following topics;

Topic I: What is Compensation and Reward system?

Topic II: Strategic Compensation and Reward Management

Topic III: Goals of Compensation Strategy

Topic IV: Compensation and Other Human Resources