This time we will discuss the meaning of remuneration and its objectives, elements and indicators. Here’s the explanation …
Table of contents :
Definition of Remuneration
Remuneration Purpose
- Increase Human Resources
- Maintain Productive Human Resources
- Creating Positive Competition
- Improve HR Welfare
- Creating Good Corporate Governance
Employee Remuneration Elements and Indicators
Example of Employee Remuneration
- Employee Salary by Performance
- Giving Bonuses to Outstanding Employees
- Provide a salary increase
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Definition of Remuneration
Remuneration is the provision of salaries (payment) to employees as a reward or reward for work / regular contributions to the organization where they work.
In other words, the definition of remuneration is something that is received by an employee from where he works as a form of reward or remuneration for his achievements or contributions to the organization where he works.
The definition of employee remuneration is closely related to the world of work. Bureaucratic remuneration is related to the payroll system for workers.
This term can also be interpreted as monetary gifts or other forms of money given to workers as gifts or gifts.
Therefore, processes are usually based on the performance of the workforce or its achievements in helping the company achieve its goals.
Several experts have explained the meaning of remuneration, including:
According to Rosenberg (1983)
Remuneration is wages and all other forms of financial benefits provided by an organization to employees for certain jobs or achievements.
According to Mochammad Surya (2004)
Remuneration is something that an employee receives as a reward for the contribution he has made to the organization where he works.
According to the Big Indonesian Dictionary (KBBI)
Remuneration is the giving of rewards / gifts / gifts to someone for services and contributions to the organization.
Remuneration Purpose
the definition of remuneration
Referring to the definition above, it can be seen that the purpose of employee remuneration in general is to give appreciation to employees or workers who have performed well in the company.
Also Read: Definition of Financial Performance
Some of the remuneration objectives include:
- Increase Human Resources
Improve the creation of quality human resources (HR). Providing remuneration will encourage workers to improve the quality of their work.
- Maintain Productive Human Resources
In an effort to maintain workers who have good quality work so as not to move to other companies.
This is related to the best competition for workforce ownership and to prevent the existence of KKN within the company.
- Creating Positive Competition
The existence of a remuneration system will create positive competition between workers in the company. With remuneration, it will be seen which workers are diligent and which are not.
Remuneration is important to motivate workers to continue to develop themselves.
- Improve HR Welfare
Increase the welfare of the workforce which will have an impact on increasing productivity in work.
- Creating Good Corporate Governance
With this remuneration, it will actually generate large profits or income for the company or business through the most effective use of capital.
Due to a business that cannot retain its members, it will incur a bigger expense when recruiting.
Employee Remuneration Elements and Indicators
There are several things that are indicators of remuneration that can affect the workforce. Companies must pay attention to the following indicators:
The remuneration given by the company to employees must be in accordance with its contribution to the development of the business or company.
Based on the high and low levels of remuneration of a company
Remuneration only needs to be given to employees who have abilities or expertise related to business development.
There are two main elements of remuneration, namely compensation and bonuses (commissions). Compensation relates to the total received by workers in physical and non-physical forms.
Also Read: Financial Ratios
In some cases, compensation is often not subject to income tax.
Meanwhile, a commission or bonus is a form of reward given to employees by calculating the percentage of sales. Bonuses are also given based on the employee’s ability to achieve targets.
Example of Employee Remuneration
One example of employee remuneration can be seen from how to pay in a company or hospital that arranges a salary system for employees in such a way.
There are 3 things that must be considered by an organization in providing the salary amount to its employees, including:
- Employee Salary by Performance
For employees who are responsible for heavy and risky work, it is natural to get a bigger energy.
Awards in the form of adequate salaries to employees are one of the ways organizations often do to prevent employees from moving jobs.
- Giving Bonuses to Outstanding Employees
Providing bonuses to employees who excel is very reasonable and is often done by many companies.
With a bonus, this will foster morale, dedication and loyalty to employees.
- Provide a salary increase
Providing salary increases for employees who deserve it is one way to maintain employee performance and loyalty.
It cannot be denied that an increase in employee salaries can have an impact on worker performance. The amount of salary can also be a measure of the quality of workers in the company.
After studying the definition of employee remuneration above, for the progress of a growing business, remuneration needs to be considered.
The absence of a remuneration system in the company can result in a decrease in the quality of the workforce or even the loss of a competent workforce.
However, if the remuneration does not pay attention to important indicators and elements it can result in an increase in company costs without appropriate income.
So that the remuneration policy must be considered in accordance with the company’s capabilities.
