Current trends in compensation are as follows:

  1. Competency based pay: Competencies are the demonstrable characteristics of a person, including knowledge, skills and behavior that enable performance. So, when the company pays for employee’s range, depth and types of skills and knowledge, rather than for the job title s/he holds, then it is called competency based Now a days, companies are focusing on determining the compensation as per the competency due to the following reasons:  

    i. Pay for skills or knowledge enhances motivation, which uplifts performance.

    ii. Paying for skills, knowledge and competencies is more strategic.

    iii. Measurable skills, knowledge and competencies are the heart of any company’s performance management process.

  2. Broad-banding: It means collapsing or grouping salary, grades and ranges into just a few wild level or bands, each of which contains a relatively wide range of jobs and salary Broad-banding supports the hierarchical arrangement of management systems as well as strategic performance improvement initiatives. So it is becoming popular in today’s organization.
  3. Comparable worth: Comparable worth refers to the requirement to pay men and women equal wages for jobs that are the comparable (rather than strictly equal) value to the employer. Under this several job factors like, skills, effort and responsibility and authority etc are assigned with points and total points are compared between different jobs to provide the similar compensation for similar points. This is used to determine determine the compensation for dissimilar job such as nurse to truck mechanic or technician etc.