Compensation Responsibilities
Compensation costs represent significant expenditures in most organizations. For instance, at one large hotel, employee payroll and benefits expenditures comprise about 60% of all costs. Although actual compensation costs can be easily calculated, the value derived by employers and employees proves more difficult to identify. To administer these expenditures wisely, HR specialists and other managers must work together.
A typical division of compensation responsibilities is illustrated in figure 12-2. HR specialists guide the development and administration of an organizational compensation system and conduct job evaluations and wage surveys. Also, because of the technical complexity involved, HR specialists typically assume responsibility for developing base pay programs and salary structures and policies. HR specialists may or may not do actual payroll processing. This labor-intensive responsibility is typically among the first to be outsourced. However, today some companies are retaining in-house processing because of improvements in software and Internet processing. Operating managers evaluate the performance of employees and consider their performance when deciding compensation increases within the policies and guidelines established by the HR unit and upper management.