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**HRM Strives to Achieve Organizational Goals**
HRM strives to achieve organizational goals and the goals of employees through effective personnel programs, policies, and procedures. Successful performance of the personnel function can greatly enhance the bottom line of any organization. The personnel practitioners, however, are challenged more today than at any time in history by a changing and more demanding labor force that has high expectations about the workplace. At the same time, rapidly advancing technologies and outside influences are changing the nature of our jobs. It is thus more critical and more difficult to maintain a work environment that motivates and satisfies Human Resources.

**Edward Flippo’s Definition**
Edward Flippo states: “personnel management is the planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance, and separation of human resources to the end that individual, organizational, and societal objectives are accomplished.”

**Wayne F. Cascio’s Perspective on Compensation**
According to Wayne F. Cascio, “Compensation, which includes direct cash payment, indirect payments in the form of employee benefits, and incentives to motivate employees to strive for higher levels of productivity, is a critical component of the employment relationship. Compensation is affected by forces as diverse as labor market factors, collective bargaining, government legislation, and top management philosophy regarding pay and benefits.”

**Definition of Compensation**
Compensation may be defined as money received for the performance of work plus many kinds of benefits and services that organizations provide their employees. Compensation is recompense, reward, wage, or salary given by an organization to individuals or a group of individuals in return for work done, services rendered, or contributions made towards the accomplishment of organizational goals. A good compensation package is a good motivator, which is why it is the primary responsibility of the HR manager to ensure that the company’s employees are well paid.

**Objectives of Compensation**
The objectives of compensation are to attract capable applicants, retain current employees, motivate employees for better performance, reward desired behavior, ensure equity, control costs, and facilitate easy understanding by all stakeholders.

**Types of Compensation**
There are different forms of compensation, including wages, salary, and incentives. Wages refer to the remuneration paid periodically to an employee/worker for the service of labor in production. Salary refers to the weekly or monthly rates paid to clerical, administrative, and professional employees. Incentives are plans or programs designed to motivate individuals or groups’ performance and can include monetary and non-monetary rewards or prizes.

**Determinants of Compensation**
Several factors influence compensation, such as the organization’s capacity to pay, prevailing pay and benefits in the industry, compensation in the industry, availability of special competent personnel, flexibility, performance/productivity/responsibilities of individuals, organization philosophy, qualifications and relevant experience, and stability of employment and advancement opportunities.

**Different Perspectives on Compensation**
The perception of compensation differs within countries and even over time. Some in society may see pay differences as a measure of justice. To stockholders, executive pay is of special interest, as it is believed to tie pay to the company’s financial performance. Employees may see compensation as an exchange of services rendered or as a reward for a job well done. Managers have a stake in compensation as it influences their success and the organization’s performance. Managers consider the affordability of compensation decisions and its impact on employee work attitudes, behavior, and overall performance.

**Forms of Pay**
Total compensation includes both direct cash and indirect benefits and services provided by employers. The major categories of compensation include base wage, merit pay, incentives, and employee benefits and services. Base wage is the basic cash compensation paid for the work performed, while incentives tie pay directly to performance. Long-term incentives focus on multi-year results, while merit pay recognizes outstanding past performance.
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Ihab Salloum