Typically, it is the responsibility of the professionals in Human Resources (HR) to recommend and often control compensation, bonuses and other rewards and recognitions available to management. It is management’s responsibility to determine what they wish to reward, how often, and whether or not the decisions they’ve made regarding these extra monetary compensations and/or perquisites are achieving the goals they wish to achieve.
The information that follows applies to human resources personnel and management at all levels. Rewards and recognitions are the responsibility of all involved in the management and development of employees. My belief is that one size does not fit all and in order to achieve the desired outcomes, both task responsibilities and individual differences must be taken into account
There are many factors that determine an organization's policy around compensation, benefits, rewards and recognitions. Perhaps the very first decision that needs to be made is one of the basic values of the company. Is it going to be a company based on seniority and security or one based on merit - or some combination of the two?
Government agencies and union controlled organizations usually make the major decisions of compensation around classification, seniority and security. So too do many organizations in the corporate world.Smaller businesses tend to compensate based more on a belief of the value of the work performed - outcomes and merit. Some large organizations also create compensation and rewards based on merit.
It’s much easier to make monetary decisions based on some external factors, such as the average compensation offered for the same job-title in other organizations, or the number of years someone has worked for the company.