The essence Employee compensation systems are associat with the organization’s plann process. The basis for the development of each compensation system must be the strategic objectives of the organization. After assess the position in the market that the organization will seek to occupy in the future, a salary system is form that would encourage foster the behavior, attitudes and results of employees that are directly relat to the development of the organization.
Accord to the research conduct by Rammal
Those remuneration systems that are relat to market economy conditions are significantly more beneficial than those that are not. An effective mom database compensation system significantly increases the motivation of employees to work better and the goals set for the compensation system — to shape the behavior of individuals and organizations that would allow gain a competitive advantage and maximiz investors’ capital. The main result of an effective compensation system is the attraction of new qualifi employees and the retention of exist key employees.
The follow factors must be taken into account
When creat an effective employee compensation system: the remuneration system must encourage the implementation of the organization’s strategy; new employees will always choose a job also because of a good salary system; the bring together data from different remuneration system must include the personal values of the employees and the culture of the organization; the salary system must keep employees in the organization and contributes to increas loyalty to the organization.
A high level of employee satisfaction
With the exist salary system must be preserv; the remuneration system must be sufficiently flexible and able to change, tak into account the influence of the external environment or new business opportunities; the total costs of maintain material data the salary system must be lower than the benefits it provides (Rammal, 2005, pp. 52-64). E. Deci and R. Ryan (2007.), after conduct a study in which the main variables were earns per share, return on assets, share of profit earn per employee, cash flow, came to the conclusion that organizations us pay systems are align with the organization’s strategy, achieve better financial results than organizations that use traditional compensation systems, which are not align with the organization’s goals.