1.

Remuneration policy
A remuneration policy, also called compensation policy, is simply a payment
plan that any type of organization will have and that mainly outlines how
employees will get paid for working for the organization. This policy might
state the base salary for each role in the organization, and it can illustrate
the conditions under which pay raises will occur as well as any additional
benefits. The benefits can include many types of incentives, such annual
bonuses, overseas trips that are fully paid for by the organization, dental
plans and more. Moreover, a remuneration policy will be designed to fit a
particular organization and the goals that it desires to achieve.
In a typical organization, there are different roles that require different levels
of responsibilities, tasks and skills. Therefore, the remuneration policy is
there to determine the appropriate pay rate for each particular set of
responsibilities and tasks. It controls how the pay will increase as employees
take on more responsibilities and tasks or move up in higher roles.

2. Factors that can affect the remuneration policy

Salesmens performance for example of Pay TV Companies like DSTV depend
on remuneration plan. The remuneration plan must be suitable to the
prevailing market condition, must be attractive to salesmen, and must be
affordable for the company. A manager has to consider a number of factors
while designing suitable remuneration plan.
Below discussed are some of the important factors that affect
companys remuneration plan:
Objectives and Policies of Company:

Amount of pay to salesmen is directly affected by objectives a company

wants to achieve and its remuneration policy. If the companys objective is to
solve consumer problems via sale force and to raise sales volume, the
company pays more fixed salary and attractive commission. Similarly, the
company will pay attractive remuneration when it has liberal policy toward
employees.
Type of Products:
Salesmen

who

are

engaged

in

selling

different

products

must

be

remunerated differently as different products need different amount time

and efforts. Certain products are easy-sold products that require less efforts
and time, while some products are hard-sold products that requires
comparatively more efforts and time.
Likewise, a completely new product requires salesmen to struggle more to
convince consumers. Even in case of technical products, more efforts and
time are needed to teach them how to use products safely in normal a
condition. Based on type and nature of products to be sold by salesmen,
remuneration plan is prepared.
Qualification, Experience and Ability of Salesmen:
Quite obviously, a salesman with higher qualifications, rich experience, and
better ability to sell expects attractive pay package. Company must pay a
fair and adequate remuneration to qualified and able salesmen as it is
benefited by them.
Nature and Amount of Tasks:
Compensation to salesmen is based on what a company wants its salesmen
to do. Amount differs significantly if salesmen have to perform variety of
tasks over and above selling the products. For example, salesmen may be

required to generate new customers for existing products, to promote new

products, to introduce products in new territories, to collect information of
competitors policies, to win competitors customers, to conduct market
survey, to handle special problems of consumers and dealers, etc. These
extra efforts must be compensated by paying higher remuneration. Not only
different tasks, but also the intensity of these tasks affects amount of
remuneration.
Competition and Competitors Remuneration Policy:
A manager has to consider the degrees of competition and competitors
remuneration policy to decide on the companys remuneration policy. It is
quite obvious that salesmen need to put more efforts when there is
competition. Their efforts must be compensated with the attractive pay.
Likewise, no company can completely ignore competitors remuneration
policy.
Availability of Sales Personnel:
Availability of the required sales personnel is one of the important factors
influencing the remuneration plan for salesmen. When company finds it
difficult to recruit the needed salesmen at low payments, it has to offer high
salary and other attractive benefits.
Legal Provisions and Restrictions:
Naturally, each company has to formulate and practice the remuneration
plan within limit of the contemporary legal framework. Legal provisions and
restrictions of the relevant Acts like the Payment of Minimum Wage Act, the
Bonus Act, etc., must be considered while deciding on remuneration to avoid
any legal problem.
Current Remuneration Practices in Industry:

No company dares ignore the current practices followed in the industry.

Companies prefer to maintain parity with the industry. So, companys
remuneration plan consists of such features similar to the industry.
Area and Types of Customers:
In certain areas where product is either not familiar or is facing a severe
competition, a salesman requires more efforts. Obviously, salary must be
high in such a territory. When salesmen are paid mainly by commission on
sales volume, the rate of commission must be kept high. Similar is the case
with the types of customer. Different types of customers need different
treatment to be convinced. So, the pay must be linked with the types of
customers.
Financial Condition of Company:
Along with above stated factors, a manager should also consider financial
health of the firm. Firms payment policy must be complementary to its
financial position. Financially sound companies adopt an attractive package
for salesmen.

3. How remuneration policy can influence the activities of a

human resource manager at the workplace
The remuneration policy affects the activities of a human resource manager
in the sense that it defines what types of employees are needed and
therefore what pay they will take. This helps the human resource manager to
carry out his functions as explained below;
HR Planning and Analysis

HR planning and analysis activities have several facets. Through HR

planning, managers attempt to anticipate forces that will influence the future
supply of and demand for employees. Having adequate human resource
information systems (HRIS) to provide accurate and timely information for HR
planning is crucial. The importance of human resources in organizational
competitiveness must be addressed as well. As part of maintaining
organizational

competitiveness,

HR

analysis

and

assessment

of

HR

effectiveness must occur. The internationalization of organizations has

resulted in greater emphasis on global HR management.
Equal Employment Opportunity
Compliance with equal employment opportunity (EEO) laws and regulations
affects all other HR activities and is integral to HR management. For
instance, strategic HR plans must ensure sufficient availability of a diversity
of individuals to meet affirmative action requirements. In addition, when
recruiting, selecting, and training individuals, all managers must be aware of
EEO requirements.
Staffing
The aim of staffing is to provide an adequate supply of qualified individuals
to fill the jobs in an organization. By studying what workers do, job analysis is
the foundation for the staffing function. From this, job descriptions and job
specifications can be prepared to recruit applicants for job openings. The
selection process is concerned with choosing the most qualified individuals to
fill jobs in the organization.
HR Development
Beginning with the orientation of new employees, HR training and
development
also includes job-skill training. As jobs evolve and change, ongoing retraining
is

necessary

to

accommodate

technological

changes.

Encouraging

development of all employees, including supervisors and managers, is

necessary to prepare organizations for future challenges. Career planning
identifies paths and activities for individual employees as they develop
within the organization. Assessing how employees perform their jobs is the
focus of performance management.
Compensation and Benefits
Compensation rewards people for performing organizational work through
pay,
incentives, and benefits. Employers must develop and refine their basic wage
and salary systems. Also, incentive programs such as gainsharing and
productivity rewards are growing in usage. The rapid increase in the costs of
benefits, especially health-care benefits, will continue to be a major issue.
Health, Safety, and Security
The physical and mental health and safety of employees are vital concerns.
The Occupational Safety and Health Act of 1970 (OSHA) has made
organizations more responsive to health and safety concerns. The traditional
concern for safety has focused on eliminating accidents and injuries at work.
Additional concerns are health issues arising from hazardous work with
certain chemicals and newer technologies.
Through a broader focus on health, HR management can assist employees
with substance abuse and other problems through employee assistance
programs (EAP) in order to retain otherwise satisfactory employees.
Employee wellness programs to promote good health and exercise are
becoming more widespread.
Workplace security has grown in importance, in response to the increasing
number of acts of workplace violence. HR management must ensure that
managers and employees can work in a safe environment.
Employee and Labor/Management Relations

The relationship between managers and their employees must be handled

effectively if both the employees and the organization are to prosper
together. Whether or not some of the employees are represented by a union,
employee rights must be addressed.
It is important to develop, communicate, and update HR policies and rules so
that managers and employees alike know what is expected. In some
organizations, union/management relations must be addressed as well.
Conclusion
Employees desire remuneration plans that they perceive as being fair and
commensurate with their skills and expectations. Pay, therefore, is a major
consideration in HRM because it provides employees with a tangible reward
for their services, as well as a source of recognition and livelihood.

References:
Armstrong, M. (2006) Strategic Human Resource Management: A Guide to
Action. Kogan Page, London

Gomez-Mejia, L.R., Balkin, D.B. &Cardy, R.L. (2003) Compensation Strategy:

An Overview

and Future Steps, Human Resource Planning, Pearson

Education (Singapore) Pte Ltd New Delhi

Schultz, H. B. (2004). Compensation Management In: Nel, P.S., Gerber, P.D.,
Van Dyk, P.S.