Characteristics of the best compensation plans are as follows:
Availability
First and foremost requirement for high performance is the availability of the compensation. Low compensation does not motivate employees to do work. Employees mostly wish for maximum hike but their Wish is never fulfilled in reality. False reporting, theft, etc. are the negative results of low hike.
Timeliness
Compensation must be provided to the employees on time because untimely or long duration taken for payment Of compensation may produce detrimental results.
Performance Related
Compensation should be based on the performance of the employee. It motivates the employee and sends the right message to other members of the organisation.
Durability
Some types of compensations are more valuable and have a long lasting effect than the others. For example, non-monetary compensation such as autonomy, challenging tasks, accountability gives long lasting effects as compared to monetary compensation.
Visibility
Management must ensure that the system of compensation is visible in an organisation, To make such a perception, it is important that the persons are given important assignments and delegated important tasks such as to lead a committee. This will create a competitive and positive environment in an organisation
Flexibility
Compensation should be given to employees at regular intervals. It should be designed in such a way that it covers both qualitative and quantitative aspects of satisfying the employees.
Cost Effective
While planning compensation, it should be kept in mind that compensation requires funds of the organisation. Therefore, compensation should be distributed in a cost effective way.
