What Is Remuneration Management?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 12 September 2019
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Remuneration management refers to the manner in which employee pay is handled within an organization. Primarily, the issue of remuneration management is strictly handled by the human resources department working in tandem with the account department for most medium- to large-scale organizations. It includes various kinds of pay and incentives for labor in the form of salaries, bonuses, insurance and pension plans, and benefits and allowances. Remuneration management is a very important part of a company’s corporate and strategic plan because the right formula or mix of remuneration will ensure that a company can hire and retain the best employees with the right human capital needed to move the company forward.

Some well-established companies exploit the principles of remuneration management to the detriment of other smaller companies. Such companies are able to entice the very best in various field with attractive remuneration packages that smaller companies simply cannot match. For instance, a telecommunication company might have invested in the human capital of its workers through various trainings and education, helping them to gain knowledge and experience in their fields. Then a new telecommunication company might open its doors for business in the same environment and entice the most skilled, experienced and trained workers away from the previous one through the use of a well-managed remuneration package.


Another way in which remuneration package is important in a company is through its use as an incentive to motivate workers or employees to more efforts toward the attainment of set targets. For instance, a company could offer bonuses to certain employees who meet a pre-determined target for the financial year. Companies must also decide how much they can afford to pay to their employees by projecting what their expected profits will be in conjunction with their past profits. This principle of remuneration management can be seen in sports management where players are bought and traded based on their perceived value to the team or club and how much the club hopes to gain from the skills of the player.

Other aspects of remuneration management includes benefits like company-paid accommodation, cars, vacations and other perks. All of these issues must be factored into the planning or designing of remuneration for the employees. This must include the clear delineation of the levels of employees in an organization and the type of remuneration packages they can expect at the various levels.


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