COMPENSATION MANAGEMENT PRACTICES AND CHALLENGES AT CHEMONICS INTERNATIONAL INC.

Abstract

The main objective of this study is to explore the compensation management practices and challenges at Chemonics International Inc. and assess if relevant compensation determinant factors are considered while setting compensation package. Moreover, it assesses employees’ perception towards the compensation practices. The rationale behind this study is, the gaps identified about the compensation management of the company while doing a preliminary study at the time of proposal writing. The researcher did pilot test and found out that there is gap in implementing internal equity. Also, the compensation system does not consider all relevant factors that are necessary for determining compensation package. As a result, employees are dissatisfied with the compensation package they receive from the company. So, to explore more on the gaps identified, the researcher conducted this study. While conducting this study, the researcher used questionnaire and interview to get first hand data from the employees of the company and leadership team respectively about the compensation management practice and its challenges. Then, data was analyzed using descriptive method by using frequency, percentiles, and grand mean scores. The main findings of the study are, there is no internal equity, the compensation management is 100% focused on employees past salaries instead of relevant determinant factors, such as internal equity, employee’s education level, work experience, external equity, cost of living, etc. This implies that the compensation policy is not competitive enough to attract best candidates and motivate the existing employees. As a result, employees are dissatisfied with the current compensation practices. It is recommended that the company focuses on internal equity, external equity and on the relevant compensation determinant factors while setting compensation package to employees so that the company can attract talented individuals and motivate and retain the existing best employee. The significance of the thesis is to show the importance of effective compensation management in attracting, motivating, and retaining talented individuals.