Compensation Management and Agents Performance

Topics: Salary, Employment, Employment compensation Pages: 31 (7006 words) Published: December 8, 2014
Compensation Management and Agents
Performance of BD19 Legacy Inc. (Agency
Office of PT Prudential Life Assurance)
Grandy William Kinsey

Undergraduate Program
School of Business and Management
Institut Teknologi Bandung



1.1. Importance of Compensation System for Company
The recent competitive situations in the business world make it difficult to obtain and hold the top workers. Once the organization is able to recognize, it can be unable to propose the right pay and to deal with the pay increases to retain the best employees. For that reason, the compensation strategy is the extremely important section of the overall Human Resource Strategy to keep the company competitiveness and successfulness. On the other hand, the compensation strategy is important to keep the personnel budget under the control and to manage the jobs in the right salary.

The compensation strategy distinguishes the organization on the job market and builds the attractiveness of the company for the top talents. They love to be hired by the desirable organization; they do not like to be hired by the average company offering the same conditions as any other average organization in the industry. Compensation often includes an employee‟s base salary and additional benefits, such as health insurance, retirement plans and performance bonuses. Competitive Advantage and Compensation Strategy

Today, the products are similar. It is hard to differentiate the cars from the other car makers. The employees are in the same condition as the consumers. They have the problem to distinguish the employers and they are not able to identify the excellent corporation, when it is not special from the rest. The competitive advantage is the essential part of the mix for the success. The company has to present itself differently, not just by the presentation, but it should distinguish itself by the unique approach toward its employees. The compensation strategy is one of the most successful differentiators.

The outstanding compensation strategy does not just separate the organization from the other organizations on the job market, it brings the differentiation into the organization as well as the successful employees and top talents feel the success in their pockets. In addition, the effective compensation strategy makes people speak about their successes with their networks. It builds the extremely excellent competitive advantage among the competitors as the people feel, the organization really values the success and it can pay the successful employees.


The effective compensation strategy manages the personnel expenses of the organization, but it supports the performance management and differentiates the employees as the successful ones are not interested to search for a fresh job opportunity. The good compensation strategy does not provoke employees to look for the web job boards during the working hours, it makes them to spotlight on delivering the results as they can be highlighted and they experience the highlight in their salaries. Furthermore, the successful compensation strategy gains the competitive advantage and can speed up the innovation processes and advance the performance management practices in the organization.

Compensation Strategy Importance toward HR Process
The compensation strategy is not vital just for the competitive advantage, but it supports the other HR Processes and helps them to become highly efficient HR Processes and being on the top in the industry (when measured and benchmarked). The compensation strategy has a strong power on the performance of the entire Human Resources, which is a good vehicle to manage the performance of Human Resources, but has to be managed carefully as it does not destroy the performance of the whole organization. Smart compensation strategy supports the HR Processes and helps to bring the top talents from the job market to the organization and helps to...

References: Baron, A., & Amstrong, M. (2007). Human Capital Management: Achieving Added Value Through
Bellows, J. D. (2001). Use of Workers’ Compensation Medical Care: Health Insurance Matters.
Fox, L. P. (2003). Compensation Strategy in Transnational Corporations. Management Decision , 41
(5), 465 - 476.
Habir, A. D., & Larasati, A. B. (1999). Human Resource Management as Competitive Advantage in The
New Millennium
Johnson, R. (n.d.). Small Business. Retrieved October 28, 2014,
Why is Compensation Strategy Important. (2012). Retrieved October 28, 2014, from HR
Management Guide:
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