7 Ways to Create an Effective Employee Compensation Strategy

13 July 2023

When compensating employees, it means you are thinking about the overall well-being of the employees. Not only limited to achieving prosperity, compensation is also followed by benefits provided so that employees feel satisfied.

Getting benefits that are included in the company's compensation package is an important factor that is considered by employees. Understanding health benefit packages, pension funds, and work leave plays an important role so that companies have comprehensive compensation.

Companies may offer other general benefits such as paid leave, health insurance, life insurance, and retirement plans. Typically, a compensation package is provided for a competitive advantage when it comes to recruiting and keeping employees happy, healthy and productive.

How to Compensate Employees

People often think that the compensation that employees need is just a salary. However, the total cost of employee compensation should cover every aspect of employee benefits. That is, compensation includes the cost of medical benefits, pensions, bonuses or other non-salary benefits. Here's how you can make effective compensation:

1. Budget Allocation

The strategy should include an organizational approach to allocating compensation money into salaries and benefits. This budget allocation will determine the amount of the total compensation budget that will be spent on salaries and the percentage that will be spent on other incentives.

For example, for a budget of $100 for compensation, if 90% is salary and 10% are benefits, you need to determine how to spend 10% of the total costs. The distribution strategy can be divided into 7% for health benefits, 2% for retirement benefits, and 1% for bonuses.

2. Develop a Salary Range

Develop salary ranges to ensure competitive employee salaries. To be more competitive, it is important to compare similar jobs within the same industry. Smaller organizations often pay vendors to help develop salary ranges, whereas larger organizations may have the human resources to conduct research internally.

Regardless, it's important to look at all the work and determine what work was done. You will also need to research job placements so you can determine a salary range that fits all job descriptions.

3. Conduct a Salary Audit

Conducting regular salary audits is important because the market is constantly changing. You need to ensure a salary range that can reflect current compensation trends. This will be closely related to the existence of specialization in certain industrial sectors.

While in a tight labor market, competition for talent has forced organizations to increase salaries to attract and retain the best performers. The purpose of conducting a salary audit is to determine how competitive the job you need is and to know the external market demands.

It is important to keep an eye on market changes and stay up-to-date on developments regarding overall employee compensation. If your company doesn't keep up with the competition, it can lead to the loss of valuable employees.

4. Determine the Total Package Benefits

Many organizations use benefit packages, in addition to salary, to attract and retain employees. Their goal is to compete in health compensation, pensions, tuition reimbursement, and other benefits.

Businesses invest in generous benefits packages because they understand that benefits can be the deciding factor for a worthy candidate. This will be one of the attractions when deciding to accept a position in an organization or considering leaving.

In some circumstances, there are employees who stay in a company because the benefits are too good to ignore. Compensation is very crucial to control turnover. This will be better than retaining employees who are not productive and do not add value to the organization.

5. Managing Employee Performance

A structured performance management process plays an important role in ensuring employees meet company goals and are assessed regularly. This process should include annual performance appraisals, goal development, and a structured process for coaching and mentoring employees. Compensation packages can positively influence employee engagement and increase employee productivity.

6. Maintain Legal Compliance

A well-defined compensation strategy will include legal requirements to ensure the organization complies with all federal and state laws. The goal is to eliminate bias created in hiring decisions. It can also ensure compliance with state laws such as minimum wages or overtime pay.

7. Create a Structured Administration

Like any other business process, the structure of your compensation plan is important. Develop an annual review process that includes salary audits, establishes a timeline for salary increases, and ensures someone is in charge of all areas of compensation.

A comprehensive compensation strategy can be the foundation for creating strong employee engagement. A business will only achieve the success it expects when it hires the right people, sets clear expectations, manages performance, and rewards employees properly for a job well done.

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HRM: Understanding Functions and Benefits for Business
18 July 2024

Human resource management or HRM (Human Resources Management) is something that is important for business owners to know.

The reason is, a good company has three resources, namely; physical resources, financial resources, and human resources. Acting as a driving force, human resources must be managed well for the sustainability of the company.

Moreover, a successful company depends on the quality of its human resources. This makes good HRM necessary to achieve company goals.

Understand more about what is meant by HRM, its functions and benefits for your company in the following review.

Understanding HRM

HRM or Human Resources Management is the activity of organizing and managing employees in a company to implement the vision, mission and business goals.

HRM is reliable enough to maintain the smoothness and efficiency of business, both for small and large scale companies.

Activities include recruitment, training, compensation, retention and employee motivation.

HRM Function in the Company

The following is a more complete explanation of the HRM function in the company, including:

Recruitment and selection

A company's HRM holds responsibility for planning, advertising, selecting and recruiting employees as needed.

This process includes interviews, assessments, and selecting the most suitable employees for the available positions.

Training and development

The second HRM function is as a designer and implementer of training programs.

The training provided must be able to improve employee skills, knowledge and competence.

For example, HRM plans training that involves employees from various departments to learn and master the latest software.

The program includes hands-on training sessions, case studies, and real projects that require employees to apply their new knowledge in the context of everyday work.

This series of training will increase employee productivity which will ultimately result in the company's progress.

Performance manager

Performance management is an important HRM task that involves assessing employee performance. HRM sets goals, provides feedback, evaluates performance, and designs improvement plans.

For example, HRM can help in setting measurable performance goals and providing constructive feedback to employees.

By conducting regular evaluations, HRM can identify performance strengths and weaknesses, as well as design training programs to improve employee performance.

Communication intermediary

The next function of HRM in the company is as a communication intermediary between leaders and employees and vice versa.

Information such as policy announcements and company developments, as well as input on a problem, is usually communicated first to HRM.

For example, a company faces a policy change regarding flexible working hours. Before the official announcement to all employees, the company leadership conveys the information first to HRM.

HRM is then responsible for communicating the policy to all employees.

HRM not only conveys information, but also opens communication channels to receive input and questions from employees.

This creates transparency in the company's internal communications and helps manage change more effectively.

Employee welfare manager

HRM is also responsible for ensuring the safety, comfort of the work environment and security standards for employees.

Apart from that, HRM is tasked with handling employee benefits such as health insurance, leave and other welfare programs.

Employee position planning

HRM workforce planning is said to be successful if the company can maintain operational continuity well, including when someone leaves.

For example, when a senior level employee chooses to leave, the company can quickly find a replacement so that productivity is maintained.

Likewise, when a staff member is to be appointed senior, he or she will receive provisions first so that they are better prepared for their appointment.

Conflict management

HRM is a key role in handling conflict among team members or between the team and leadership. They can mediate, resolve disputes, and find solutions that support a harmonious work environment.

By mediating, they facilitate constructive discussions and reach an agreement that satisfies both parties. These actions help maintain a positive work atmosphere and support team productivity.

Benefits of HRM for Companies

If the HRM functions above run well, the company can obtain several benefits:

  • Play a role in achieving departmental or company targets as a whole which has an impact on increasing profits.
  • Appropriate placement of employees according to competency and company needs to maximize work results.
  • Maximum time management resulting in optimal productivity.
  • Facilitates the delegation process from leadership, so that employees can focus on carrying out their respective tasks.
  • Providing employees with a series of training to improve their abilities and skills in preparation for their next career level.

That's the information you need to know about what HRM is, its functions and benefits for your company. A good HRM system is one that is able to produce a solid, productive and profitable team for the company.

However, an HRM system that was successful 5-10 years ago is not necessarily still relevant today. An HR manager must keep up with various changes ranging from the way business is managed, technology, to the expectations of today's job seekers.

If you want to explore HR that is relevant today, follow the short program HR Today: Building Employee Excellence from Prasmul Eli.

In the two-day program, the scope of learning includes:

  • HR Today - What & Why, People Strategy
  • HRM Models
  • Acquiring - DEI & EVP (Employer Branding)
  • Developing - Bench Strength & Reskilling Upskilling
  • Guest Speakers
  • Rewarding - total reward package
  • Maintaining - Well Being, Mental Health, Hybrid Working, Work Life & Play
  • Wrap Up

Register yourself via the following link to take this class!

The Role of Artificial Intelligence (AI) in Online Assessment Center, a Paradox in the Digital Age
03 July 2024

prasmul-eli and Talentlytica, a start-up company that focuses on providing assessment technology services for human resource assessment purposes, held a webinar entitled "Improving Assessor Competence in the Digital Age with Online Assessment Center". The webinar thoroughly explores the position of the Assessment Center Assessor in the midst of the onslaught of Artificial Intelligence (AI) technology which can be said to "threaten" the position of the Assessors because AI itself can work faster in making a report or writing, when compared to even the most experienced Assessor. However, it turns out that in the Online Assessment center, the assessor still takes a very important role in the Assessment Center. AI can certainly play a big role in making the Assessment Center process more effective and efficient, but to completely replace the Assessors who have the wisdom and flexible cognition abilities like humans, is not possible for AI in most scenarios.

Here are some reasons why it is not possible for AI to create an Assessment Center report:

Complex Evaluation Methods:

Assessment Center assessors often evaluate not only the outcome of tasks, but also the process, interpersonal skills, decision-making, and other aspects of a candidate's behavior. AI, while capable of analyzing certain types of data and responses, may struggle to capture the complexity of interactions, discussions, expressions, gestures and the general context of human thought.

 Subjectivity and Context:

Assessment Center Assessors conduct assessments using analytical skills, real-world experience, intuition, and wisdom to assess situational context that is currently difficult for AI to accurately replicate. In addition, Assessors are able to read subtle cues, adapt evaluation criteria based on real-world observations, and provide holistic feedback that considers factors beyond quantitative calculations, including recognizing whether participants are using AI to respond within the Assessment Center.

 Ethical Considerations:

Using AI to make decisions in an Assessment Center process raises ethical issues related to bias, fairness, and transparency. Assessors who have been specifically trained in Assessment Centers are better equipped to deal with these ethical challenges, as they are already skilled and will ensure that assessments are fair and inclusive.

 Candidate Experience:

Candidates will often feel much more comfortable interacting with humans in an Assessment Center process, as it involves more emotion, including empathy, understanding, and personalized feedback. The Assessment Center Assessor can provide a personal touch that may be difficult for AI to replicate effectively.

 Assessment Center is indeed a process that is more dominated by humans, the use of technology including AI in it, will indeed be very helpful in the administrative process, but not in the end result. In the end, human expertise and technological advances such as AI will produce a unique combination of efficient and effective processes, if used properly.


Gardhika Waskita Pakqi
Resident Assessor of prasmul-eli

Company Culture as the Key to Organizational Success
01 July 2024

Company culture is an invisible foundation, but is very determining in the success of an organization. Because in a business world full of competition, the success of a company is not only determined by a strong business strategy.

Corporate culture is the identity of an organization, including the values, beliefs and norms that shape the way employees work and interact. A positive culture can be a driving force in achieving the company's long-term goals and creating a productive and harmonious work environment.

Basically, this one thing is a reflection of the organization's vision and mission which is translated into daily actions and interactions between team members. When the culture is clear and consistently implemented, employees can be more connected to the company's goals and motivated to contribute optimally.

However, building and maintaining a positive company culture is not an easy task. Find out how by reading this article to the end.

The Importance of Company Culture

Here are some reasons why building a strong company culture is critical to business success.

Increase Performance and Productivity

A positive company culture can improve employee performance and productivity. When employees feel valued and are in a supportive environment, they tend to be more motivated to provide their best performance.

Studies show that companies with a strong culture have higher levels of employee engagement. This has a direct impact on increasing productivity.

Increasing Employee Loyalty

Employees who feel connected to the company's values ​​and goals tend to be more loyal. An inclusive and supportive company culture makes employees feel like they are part of something bigger.

Ultimately this process will reduce turnover and costs associated with recruiting and training new employees.

Creating a Strong Corporate Identity

Corporate culture helps shape a company's identity and reputation. A strong identity makes it easier for companies to attract the best talent and create a positive image in the eyes of customers and business partners.

For example, companies like Google and Zappos are known for their unique cultures that have become an integral part of their brands.

Steps to Building a Company Culture

After understanding the importance of having a strong company culture, the next step is knowing how to create and maintain one. The following are several strategic steps you can take to build a positive culture and support long-term success.

Determine Company Values ​​and Vision

The first step in building a company culture is defining the company's values ​​and vision.

These values ​​must reflect the principles that the company wants to uphold and guide every business decision. A company vision should provide a clear picture of the company's long-term goals and aspirations.

Effective Communication

Once the values ​​and vision are established, it is important to communicate them effectively to all employees. Open and transparent communication ensures that everyone in the company understands and imbues these values.

This can be done through training, regular meetings, and various internal communication channels.

Apply Values ​​in Daily Practice

Company values ​​must be integrated into all aspects of company operations, from the recruitment process to performance evaluation. Concrete examples of implementing these values ​​will help strengthen company culture.

For example, if one of the company's values ​​is innovation, then the company must provide space and resources for employees to innovate.

Recognition and Awards

Rewarding employees who contribute positively to company culture can motivate and strengthen desired values. An effective recognition program not only improves employee morale but also sends the message that the company values ​​and respects individual contributions.

Supportive Leadership

Leadership plays an important role in building and maintaining company culture. Leaders must be role models who reflect the company's values ​​in their daily actions. Authentic and inspiring leadership can create a positive and dynamic work environment.

The Impact of Corporate Culture on Business Success

Building a company culture also has a direct impact on business success. The following are some examples of the impact:

Innovation and Creativity

A company culture that encourages collaboration and creativity can produce sustainable innovation. Companies that give employees the freedom to innovate will be better prepared to face challenges and changes in the market.

Business Sustainability

A strong company culture helps create business stability and continuity. With motivated and loyal employees, companies can focus more on long-term development rather than having to constantly address internal problems.

Reputation and Competitiveness

A positive company culture builds a good reputation in the eyes of customers, business partners and society. This reputation increases a company's competitiveness in the market, enabling the company to attract and retain customers.


In an ever-changing business world, the ability to adapt is the key to success. A company culture that supports learning and adaptation helps companies to more easily navigate change and innovation in the marketplace.

Building a strong company culture is a long-term investment that brings many benefits to the company. A positive and strong culture will create a strong corporate identity, increase employee loyalty, and strengthen the company's reputation.

Apart from knowing about company culture, there are still many business aspects that need to be studied for organizational success. You can choose prasmul-eli which has several short program options.

With a learning duration of only 1-3 days, this program presents facilitators who are experts in their fields so you can gain new business insights and tricks.
What are you waiting for, contact prasmul-eli for more complete program information via this link!