PowerPoint Presentation

By:Vipul NangiaShashank Jha

Compen$ation

Definitions

Compensation is the remuneration an employee receives for his/her contribution to the organization.

- Both Monetary and Non-Monetary payWages and Salary ??TheoriesReinforcement and Expectancy TheoryAgency TheoryEquity Theory

Why Care ???

Contribution to the cost of Production.

Consequences:

Job Dissatisfaction

Absenteeism

Turnover/AttritionBenefits & Services

Anything that employee receives in addition to direct remuneration-> Indirect Compensation -> Tax Benefits for both employee and employer.

Benefits : Direct Monetary Value to individual employee can be ascertained e.g. Medical insurance, pensions etc.Services: Direct money values for an individual employee cant be ascertained e.g. Company newspapers , Employee Assistance Programmes etc.Not tied to Performance but to an organization membership.

Hygiene or Motivator??Devising a Compensation Plan

Job Evaluation : Process of systematically determining the relative worth of jobs to create a job structure for the organization. It could be job based, skill based or competency based

Hays System of Job EvaluationKnow-HowAccountabilityProblem SolvingJob WorthTechnical SkillsManagerial SkillsHR skillsImpact on end resultsScope/MagnitudeFreedom to ActEnvironmentChallengePay Survey/Salary Survey

Methods:Data Based Survey available data from agencies/consultantsField Survey questionnaires, interviews etc.

Benchmarking SurveyIdentify rolesIdentify Role descriptionsIdentify Comparator BasketIdentify Roles from comparators to be benchmarkedChoose method of survey

Factors Influencing Compensation : Internal Factors Business Goals/StrategyEmployers Ability to payCompany policy pay policies ->Seniority or performance->Piece wise rate or merit basedJob WorthEquity

Commission vs Incentives??

Business StrategyCompensation StrategyCompensationInvest to grow (Merging or Growth)Stimulate EntrepreneurshipHigh Cash Above average incentivesProtect Markets (Maturity)Reward Management SkillsAverage CashModerate incentivesHarvest Earnings-Reinvest elsewhere (Decline)Cost ControlBelow-average cashSmall incentivesExternal Factors Demand & SupplyCompa RatioEconomic conditionsWorking EnvironmentLawsCollective bargainingIncrementsHow increments are given ?RatingsCompany PerformanceTeam PerformanceMarket standingComponents COMPONENTS OF GROSS SALARYBasic Salary BonusCommission/IncentivesAllowancesPerquisitesLeave Travel Concession In India (LTC )Medical FacilitiesRetirement Benefits

Allowances Entertainment allowanceHouse Rent AllowanceAllowances for official purposesTravelling AllowanceDaily AllowanceConveyance allowanceHelper AllowanceAcademic AllowanceUniform AllowanceAllowances for personal purposesChildren Education allowanceHostel Expenditure AllowanceTribal Area allowanceTransport AllowanceUnderground allowanceOther AllowancesDearness AllowanceLunch AllowanceCity compensatory AllowanceServant AllowanceMedical Allowance etc.

PerquisiteRent free accommodation (RFA)Concessional AccommodationLIC Policy & Annuity PolicyMonetary obligation of employeeFringe benefitsInterest free or concessional loans Use of Movable AssetsTransfer of Movable assetsTravelling, Tour, Accommodation & Other ExpensesFree Meals, Tea & Snacks Gift, Vouchers or token

Retirement BenefitsGratuity Pension Leave salary Retrenchment compensation Voluntary Retirement Provident fund

Acts Payment of wages ActPayment of Bonus ActPF ActGratuity ActEqual Remuneration ActBandingFIGURE Broadbanded Structure and How It Relates to Traditional Pay Grades and Ranges

Overlap of BandsBand ABand BBand CBand DSalarySeniorityQ & A