One of the goals of human resource management, which ensures that the organization has a workforce motivated and high performing, as well as equipped with the means to deal with changes that can meet the needs of workers. In an effort to support the achievement of a motivated workforce and high-performance, by way of fulfilling her needs.
Compensation system also has the potential to be one of the most important tool in shaping behavior and affect performance. However, many organizations overlook this potential with a perception that "compensation is not more than a cost to be minimized". Without being aware of some organizations that ignore the potential importance and berpersepsi mistakenly had put the system precisely as a means of improving behavior is not productive or counter productive. The result appeared a number of personal problems such as low employee motivation, poor job performance, high turn over, irresponsible behavior and even the employee who is believed to stem from dishonestry compensation system that is not proportional.
According to Handoko, "an important driving factor that causes people to work is the need in human beings that must be met (Handoko, 2003, p.30)" In other words, departing from the desire to make ends meet, people work to sell energy, thoughts and time also owned the company in hopes of getting compensation (reward).
In general, compensation is the key to solving how to make the most of the members act in accordance with the wishes of the organization. Compensation system will help create a willingness among the people who qualified to join the organization and conduct the necessary organizational measures. Generally means that employees must feel that by doing so, they will get the important needs that they need. A category including social interaction, status, recognition, growth and development.
According to J. Long (1998:8) in his Compensation in Canada defines the compensation system is the (partial) of the reward system that is only concerned with the economy, however, since the belief that individual behavior is influenced by the system in a broader spectrum of the compensation system can not be separate from the whole system of rewards provided by the organization. While the reward itself is all that is provided for organizations to meet one or more individual needs. The two types of reward are:
a. Extrinsic compensation, which satisfy the basic needs for survival and security as well as social needs and recognition. Gratification is obtained ari factors that surround the employees in their work, for example: wages, supervision, co workers and working conditions.
b. Intrinsic compensation, which meet the needs of the higher level, for example, to pride, appreciation, and growth and development that can be derived from factors inherent in the employee's employment, such employee challenge or interest of a given job, the level of diversity / variation in work, feedback, and decision-making authority within the meaning of work and the significance of the work for organizational values.
Handoko, said:
"Compensation is anything that is received by the employee as remuneration for their work (Handoko, 2003, p.114-118)" So through the compensation of employees to improve work performance, motivation and job satisfaction and increasing needs.
The issue of compensation is not only important because it is a major boost someone on the staff, but also a big influence on the morale and enthusiasm of the employees work. Thus, each entity must be able to determine the most appropriate compensation, so that it can sustain a business entity to achieve goals more effectively and more efficiently. How big is the compensation awarded shall be such so as to bind the employees. This is very important because if
components are given to employees is too small when compared to other business entities, then this could cause the employee to move to another business entity.
In the development of compensation systems is of three main components, namely:
a. Basic wage (based pay), a component of the basic wage for most employees, and are generally based on the count of time, such as hours, days, weeks, months or a year.
b. Wages based on performance (performance related pay), relating to the monetary rewards on the basis of size or form of wages based on performance measures of individual, group or organization.
c. Wages are not directly recognized as employee benefit "for the benefit of employees" consists of goods or services of non-cash item services that directly satisfy some specific needs of employees, such as security of income (income security), including life insurance, health coverage, including medical & dental and pension plan.
According to Mondy, a form of compensation given to employees the company can be classified into 2 (two), namely: (1) financial compensation, and (2) non-financial compensation,
A. Financial compensation (financial compensation)
Financial compensation means compensation is realized by a number of currency to the employees concerned. Implementation of financial compensation can be divided into 2 (two), namely:
a. Direct Financial compensation (direct financial compensation) direct financial compensation is a form of payment that employees receive the money directly in the form of salary / wages, economic benefits, bonuses and commissions.
Salary is the remuneration paid to employees periodically and have the assurance of certainty, whereas wages are fringe benefits paid to workers based on the agreed payment agreement.
b. Indirect Financial Compensation (indirect financial compensation) Financial compensation is not directly include any financial award that does not include direct compensation. Form of indirect compensation includes the labor insurance program (Jamsostek), social assistance, payment of hospital costs (treatment), leave and
other.
2. Non-financial compensation (non-financial compensation)
Non-financial compensation is the fringe benefits provided to employees of the company rather than the form of money, but intangible facilities. Compensation of this type can be divided into 2 (two), namely:
a. Non-financial the-job (job-related compensation)
Non-financial compensation regarding this work can be interesting work, opportunities for developing, training, authority and responsibility, reward for performance. This form of compensation is a manifestation of self-esteem needs (esteem) and actualization (self actualization).
b. Non-financial job environment (compensation relating to the work environment)
Non-financial compensation on the work environment may include supervision of competence (competent supervision), which supports the working conditions (comfortable working conditions), the division of labor (job sharing). (Mondy, 2003, p.442)
The amount of compensation received by employees reflects the position, status, and the fulfillment of that enjoyed by the employee with his family. If the compensation received by employees of the larger, meaning the higher the position, status, the better, and he enjoys meeting the needs of more and more also. Thus, the better employee job satisfaction and performance will be good.
According to Handoko "Compensation to enhance employee motivation and job satisfaction (Handoko, 2003, p.155)." The existence of adequate compensation can make employees motivated to work well, as expected achieve the enterprise, and can increase the level of employee satisfaction.
Meanwhile, according to Hasibuan, "Compensation or fringe benefits are generally aimed at the interests of employers and employees (Hasibuan, 2002, p.135)."
Interests of the company to obtain compensation benefits greater work performance of employees. While the interest on the compensation received by employees, which can meet the needs and desires and become household economic security. For companies, the compensation is a major factor in employment. Many human resource policies associated with the discretion to determine the compensation of employees. Large-small level of compensation is related to educational level, job level, and the period of employment.
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