Compensation models are based on productivity and dynamic attitude of an employee whereas employer expects to receive tax benefits, cost cut in recruitment, labor cost control, abiding by the legal requirements and regulations of government and such other benefits that an employer expects to derive by offering compensation models.
Apart from these, individual performance and overall employee turnover and contribution to the growth of an organisation also are dependent for fixing compensation to employees. Some of the other factors that enable an employer to develop a compensation model are, attendance, performance, excellent communication and good practice of organizational behavior are all observed in employees as a part of compensation model.
This also varies in organizations depending on the kind of activity that a corporate organization is engaged in. Compensation models are also designed basing on physical activity and exertion such as inventory stores management, transport management, loading unloading of goods, marketing jobs or mental activity such as accounting jobs, taxation jobs, desk jobs on computers and other administrative jobs.
A basic difference between the two is physical exertion does require more energy and strength to travel from one place to another and the kind of stress is more whereas for mental activity jobs, more number of working hours release and result in mental stress although short intervals of break can takeoff the stress such as coffee time, lunch or snack time in offices.
It also depends on the capacity of an individual (COO, CFO, CEO) in possessing the potential ability to handle and administer various tasks and matters in an organized manner without exercising or expressing stress. Atmosphere or working environment in an office carries a good importance which motivates each worker to perform well, therefore, compensation model is designed considering all these factors with the growing trend of globalisation wherein different cultures, traditions and different education background employees come together for the purpose of work.