WF-911 Agribusiness Management Series Designing and Administering Compensation Plans Phil Kenkel, Extension Economist Rodney Holcomb, Extension Economist C ompensation management refers to the process of establishing the structure of wage levels for various positions, designing incentive systems, and setting individual wages and incentives within these established structures. Compensation management is a major aspect of personnel management, which impacts the overall performance of the firm. Compensation has an impact on job satisfaction, employee turnover, productivity and total organizational effectiveness.
Total compensation consists of base pay, incentives and benefits.
Non-monetary factors, such as physical working conditions, training opportunities, and the social work environment, also have major impacts on recruiting and keeping good employees. Be consistent with federal, state, and local laws. Viewed by the individual employees as being equitable, relative to other employees within the organization and similar positions outside the firm. Meet the employee s need for a secure and predictable income. The first step is to establish the average total compensation for each position description.