Competency-based compensation system: as a strategic HR technique with special reference to Coimbatore

Abstract

Competency management is an important strategic area of organisations and it will have an impact on employer's ability to attract applicants, retain employees, and ensure optimal levels of performance from employees in meeting the organisation's strategic objectives. Organisations must reward employees because they are in turn looking for certain kinds of behaviour, they need competent employees who agree to work with high level of performance, loyalty and commitment. Individual employees expect in return for their contribution to the organisation, rewards in the form of a good compensation which satisfies them. A good compensation system thus helps an organisation to achieve its objectives and satisfy its employees and motivate to them to excel in their roles. A good compensation system must be based on 'pay for the person', which can be based on actual performance levels exhibited by the employees.