121 Understand the need to link remuneration policies and practices to an organisation’s strategic business objectives and identify the key objectives of employee remuneration122 Explain the mechanics

12.1 The need to link remuneration policies and practices to an organisation’s strategic business objectives is important as it can help to attract, retain and motivate employees who are aligned with the organisation's goals. The key objectives of employee remuneration include attracting and retaining staff, motivating and rewarding high performance, and aligning employee behaviour with organisational goals.

12.2 Common job evaluation systems include point rating, job ranking, and factor comparison. Computerised job evaluation systems use algorithms to analyse job roles and determine their relative worth within the organisation. E-remuneration systems allow for the management of employee compensation and benefits through web-based platforms.

12.3 Pay surveys are used to gather information on remuneration practices in comparable organisations. This information can be used in the design of an organisation’s remuneration program to ensure it is competitive and aligned with industry standards.

12.4 Pay ranges refer to the range of salaries offered for a particular job role. These ranges are typically based on factors such as experience, education, and job responsibilities.

12.5 The gender pay gap refers to the difference in pay between male and female employees. Senior executive remuneration has come under scrutiny due to the large disparity between executive salaries and those of lower-level employees.

12.6 Linking pay to performance can be done through performance-based pay, such as bonuses or commission, or by offering pay increases based on performance reviews. This can help to motivate employees to perform at their best and align their behaviour with organisational goals.

12.7 Pay increases can be used to recognise an employee’s contribution to the organisation. This can include providing salary increases for outstanding performance, meeting or exceeding performance targets, and achieving milestones.

12.8 Incentive remuneration is becoming more popular as organisations seek to motivate and retain high-performing employees. This can include performance-based bonuses, profit-sharing schemes, and stock options. Incentive remuneration can help to align employee behaviour with organisational goals and improve employee retention