Definition Of Remuneration

Understanding Remuneration

What is remuneration? Remuneration is the provision of salary (payment) to an employee as a reward or reward for work / contributions that are routine to the organization where he works.

In other words, the meaning of remuneration is something that is received by an employee from the place where he works as a form of reward or retribution for his achievements or contribution to the organization where he works.

Understanding employee remuneration is closely related to the world of work. Bureaucratic remuneration is related to the workforce payroll system. This term can also be interpreted as rewarding money or other forms given to labor as an award or reward. Therefore, the process is usually based on the performance of the workforce or its achievements in helping the company achieve its goals.

Provision of remuneration is also based on certain principles or rules that have been set in the company. More about the meaning of remuneration and the objectives and elements will be discussed in this article.

Definition of Remuneration According to Experts

Some experts have explained the meaning of remuneration, including:

1. Rosenberg (1983)

According to Rosenberg, the meaning of remuneration is wages and all other forms of financial benefits that an organization provides to its employees for certain jobs or achievements.

2. Komarrudin (1983)

According to Komarrudin, the definition of remuneration is a form of granting certain types of services or rewards for services that have been used.

3. Mochammad Surya (2004)

According to Mochammad Surya, the definition of remuneration is something that an employee receives as a form of compensation for the contribution he has made to the organization where he works.

The Purpose of Providing Remuneration

Referring to the above definition, it can be seen that the purpose of employee remuneration in general is to give appreciation to employees or workers who have good performance in the company. Some remuneration goals include:

1. Increase Human Resources

Increase the creation of quality human resources (HR). Remuneration will encourage workers to improve the quality of their work.

2. Maintaining Productive Human Resources

In an effort to maintain workers who have good quality work so as not to move to another company. This is related to the competition for the best labor ownership and to prevent KKN in the company.

3. Creating Positive Competition

The existence of a remuneration system will create positive competition between workers in the company. With remuneration it will be seen which workers are diligent and which are not. Remuneration is important to motivate the workforce to continue to develop themselves.

4. Improving HR Welfare

Improving the welfare of the workforce which will later have an impact on increasing productivity at work.

5. Creating Good Corporate Governance

With the remuneration it will actually generate large profits or revenues for the company or business through the most effective use of capital. Because for a business that cannot retain its members, it will actually make a larger expenditure when hiring.

Employee Remuneration Elements and their Indicators

There are several things that become indicators of remuneration that can be an influence on the workforce. Companies must pay attention to the following indicators:

  • Remuneration provided by companies to workers must be in accordance with their contribution to the development of the business or company.
  • Based on the level of remuneration from a company.
  • Remuneration only needs to be given to workers who have the ability or expertise related to business development.

There are two main elements of remuneration, namely compensation and bonuses (commissions). Compensation relates to the overall workforce received in both physical and non-physical forms. In some cases, compensation is often not subject to income tax.

While the commission or bonus is a form of reward given to employees by calculating the percentage of sales. Bonuses are also given based on the employee’s ability to achieve targets.

Examples of Employee Remuneration

One example of employee remuneration can be seen from the way salaries are provided at companies or hospitals that arrange their employees’ salary systems in such a way.

There are 3 things that must be considered by organizations in providing salary amounts to their employees, including:

1. Employee Salaries According to Performance

For employees who are responsible for heavy work and at risk it is natural to get a bigger gahi.

Appreciation in the form of adequate salaries to employees is one of the ways that organizations often do to keep their employees from changing workplaces.

2. Providing Bonuses for Outstanding Employees

Giving bonuses to employees who excel is a very natural thing and is often done by many companies.

With a bonus, this will foster employee morale, dedication and loyalty.

3. Provide Salary Increase

Providing salary increases for employees who deserve it is one way to maintain employee performance and loyalty.

It is undeniable that an increase in the salaries of employees can have an impact on employee performance. The amount of salary can also be a measure of the quality of workers in a company.

After learning the definition of employee remuneration above, then for the progress of a growing business, remuneration needs to be considered. The absence of a remuneration system in a company can result in a decrease in the quality of the workforce or even loss of competent workforce.

However, if the remuneration is not given attention to the indicators and important elements it can result in an increase in company spending without proper income. So the remuneration policy must be considered according to the company’s ability.

Above is the explanation and the meaning of remuneration, objectives, elements, indicators, and examples of remuneration. Hopefully it’s a useful information for you.

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