Description
This is a documentation explains about compensation it includes the topics like direct and indirect compensation.
Compensation Definitions
Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. compensation may achieve several purposes assisting in recruitment, job performed and job satisfaction.
HOW IS COMPENSATION USED?
Compensation is a tool used by management for a variety of purpose to further the existence of the company. Compensation may be adjusted according the business needs, goals and available resources.
Compensation Management :
Compensation is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees. Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness.
Components of Compensation System
Compensation systems are designed keeping in minds the strategic goals and business objectives. Compensation system is designed on the basis of certain factors after analyzing the job work and responsibilities. Components of a compensation system are as follows: • Job analysis • Salary structures • Pay structure
Types of Compensation
Compensation provided to employees can direct in the form of monetary benefits and/or indirect in the form of non-monetary benefits known as perks, time off, etc. Compensation does not include only salary but it is the sum total of all rewards and allowances provided to the employees in return for their services. If the compensation offered is effectively managed, it contributes to high organizational productivity.
1. Direct Compensation 2. Indirect Compensation 1. Direct Compensation
Direct compensation refers to monetary benefits offered and provided to employees in return of the services they provide to the organization. The monetary benefits include basic salary, house rent allowance, conveyance, leave travel allowance, medical reimbursements, special allowances, bonus, Pf/Gratuity, etc. They are given at a regular interval at a definite time. Basic Salary Salary is the amount received by the employee in lieu of the work done by him/her for a certain period say a day, a week, a month, etc. It is the money an employee receives from his/her employer by rendering his/her services. House Rent Allowance Organizations either provide accommodations to its employees who are from different state or country or they provide house rent allowances to its employees. This is done to provide them social security and motivate them to work. Conveyance Organizations provide for cab facilities to their employees. Few organizations also provide vehicles and petrol allowances to their employees to motivate them.
Leave Travel Allowance These allowances are provided to retain the best talent in the organization. The employees are given allowances to visit any place they wish with their families. The allowances are scaled as per the position of employee in the organization. Medical Reimbursement Organizations also look after the health conditions of their employees. The employees are provided with medi-claims for them and their family members. These medi-claims include health-insurances and treatment bills reimbursements. Bonus Bonus is paid to the employees during festive seasons to motivate them and provide them the social security. The bonus amount usually amounts to one month’s salary of the employee. Special Allowance Special allowance such as overtime, mobile allowances, meals, commissions, travel expenses, reduced interest loans; insurance, club memberships, etc are provided to employees to provide them social security and motivate them which improve the organizational productivity.
2. Indirect Compensation
Indirect compensation refers to non-monetary benefits offered and provided to employees in lieu of the services provided by them to the organization. They include Leave Policy, Overtime Policy, Car policy, Hospitalization, Insurance, Leave travel Assistance Limits, Retirement Benefits, Holiday Homes. Leave Policy It is the right of employee to get adequate number of leave while working with the organization. The organizations provide for paid leaves such as, casual leaves, medical leaves (sick leave), and maternity leaves, statutory pay, etc. Overtime Policy Employees should be provided with the adequate allowances and facilities during their overtime, if they happened to do so, such as transport facilities, overtime pay, etc. Hospitalization The employees should be provided allowances to get their regular check-ups, say at an interval of one year. Even their dependents should be eligible for the medi-claims that provide them emotional and social security.
Insurance Organizations also provide for accidental insurance and life insurance for employees.
This gives them the emotional security and they feel themselves valued in the organization. Leave Travel The employees are provided with leaves and travel allowances to go for holiday with their families. Some organizations arrange for a tour for the employees of the organization. This is usually done to make the employees stress free. Retirement Benefits Organizations provide for pension plans and other benefits for their employees which benefits them after they retire from the organization at the prescribed age. Holiday Homes Organizations provide for holiday homes and guest house for their employees at different locations. These holiday homes are usually located in hill station and other most wanted holiday spots. The organizations make sure that the employees do not face any kind of difficulties during their stay in the guest house. Flexible Timings Organizations provide for flexible timings to the employees who cannot come to work during normal shifts due to their personal problems and valid reasons. Need of Compensation Management
?
A good compensation package is important to motivate the employees to increase the organizational productivity.
?
Unless compensation is provided no one will come and work for the organization. Thus, compensation helps in running an organization effectively and accomplishing its goals.
?
Salary is just a part of the compensation system, the employees have other psychological and self-actualization needs to fulfill. Thus, compensation serves the purpose.
?
The most competitive compensation will help the organization to attract and sustain the best talent. The compensation package should be as per industry standards.
Strategic Compensation Strategic compensation is determining and providing the compensation packages to the employees that are aligned with the business goals and objectives. In today’s competitive scenario organizations have to take special measures regarding compensation of the employees so that the organizations retain the valuable employees. The compensation systems have changed from traditional ones to strategic compensation systems.
Employee Compensation
Compensating an employee is not simply a process of settling upon a mutually agreeable salary. There are a number of regulations and reporting requirements that need to be met. Here is some information a variety of issues surrounding compensation that you need to be aware of. Competitive Wages When deciding pay rates for skilled workers, it may be helpful to keep tabs on the going rates for your industry and area. The U.S. Department of Labor's Bureau of Labor Statistics Web site maintains a comprehensive list of median and mean salaries across the United States by occupation, industry and area of the United States. Minimum Wage Requirements The Fair Labor Standards Act (FLSA) establishes current minimum wage requirements for employees. Exceptions include lower wages for employees under 20 years of age for
a defined period of time, certain full-time students, apprentices, interns and workers with disabilities. Many states also have minimum wage laws. In cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages. Overtime Wages The rate for all hours worked over a 40 hour workweek are at least 1 1/2 times an employee's regular rate of pay. Some exceptions to overtime pay include administrative or executive employees, which fall under the "white collar exemption," as well as outside sales employees. Child Support Enforcement Every U.S. employer, large and small, must comply with state and federal laws pertaining to child support enforcement. The three principal requirements include: 1. You must report all newly hired employees to your State Directory of New Hires. 2. When you receive a valid Order or Notice to Withhold Income for Child Support for an employee, you must follow the terms of the Order/Notice and deduct the specified amount from each paycheck within the allowable limits. This amount must then be remitted within designated timeframes. 3. You must provide information to the state or local child support enforcement agency for information about an employee, such as information about his or her earnings, current residence, and health insurance coverage, and report the termination of an employee for whom you are withholding child support (whether the employee is fired, resigns or is temporarily laid off). Wage Garnishment Wage garnishment occurs when an employer withholds the earnings of an individual for the payment of a debt as the result of a court order or other equitable procedure. Learn about employers' responsibilities and employees' rights. Student Loan Garnishment Actions Section 488A of the Higher Education Act authorizes the U.S. Department of Education and student loan guarantors to collect defaulted federally-financed student loans by means of an administrative garnishment order to the former student's employer, without the need for a court order. Employee Benefit Plans The Employee Retirement Income Security Act (ERISA) sets uniform minimum standards required by federal law to ensure that employee benefit plans are established and maintained in a fair and financially sound manner. Workers' Compensation Programs Learn the ins and outs of general federal and state workers' compensation rules, or look up specialized programs to aid coal miners, longshoremen and workers from other industries.
Workers Compensation Insurance
Workers' Compensation is a no-fault insurance system that provides wage replacement, medical, and rehabilitation benefits to employees that are injured at work. Being no-fault, it requires the employer to be responsible for the payment of benefits irrespective of who or what caused or contributed to an injury or illness that is connected with a job. Almost every state requires that employers purchase workers' compensation insurance. Coverage of workers tends to be fairly comprehensive, although state workers' compensation laws often exempt domestic, farm, and other "casual" workers. Moreover, independent contractors, being self-employed, are not covered by these laws. The laws governing the amount and duration of lost income benefits, the provision of medical and rehabilitation services, and how the system is administered vary from state to state. Check with your state about what the laws are for your business. If you do business in more than one state, you will need to comply with the laws in each state in which you have offices with permanent employees.
http://www.citehr.com/68382-what-definition-compensation-management.html? time=1271960195#1271960195#ixzz0lr1x1KPu
doc_295552886.doc
This is a documentation explains about compensation it includes the topics like direct and indirect compensation.
Compensation Definitions
Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. compensation may achieve several purposes assisting in recruitment, job performed and job satisfaction.
HOW IS COMPENSATION USED?
Compensation is a tool used by management for a variety of purpose to further the existence of the company. Compensation may be adjusted according the business needs, goals and available resources.
Compensation Management :
Compensation is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees. Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness.
Components of Compensation System
Compensation systems are designed keeping in minds the strategic goals and business objectives. Compensation system is designed on the basis of certain factors after analyzing the job work and responsibilities. Components of a compensation system are as follows: • Job analysis • Salary structures • Pay structure
Types of Compensation
Compensation provided to employees can direct in the form of monetary benefits and/or indirect in the form of non-monetary benefits known as perks, time off, etc. Compensation does not include only salary but it is the sum total of all rewards and allowances provided to the employees in return for their services. If the compensation offered is effectively managed, it contributes to high organizational productivity.
1. Direct Compensation 2. Indirect Compensation 1. Direct Compensation
Direct compensation refers to monetary benefits offered and provided to employees in return of the services they provide to the organization. The monetary benefits include basic salary, house rent allowance, conveyance, leave travel allowance, medical reimbursements, special allowances, bonus, Pf/Gratuity, etc. They are given at a regular interval at a definite time. Basic Salary Salary is the amount received by the employee in lieu of the work done by him/her for a certain period say a day, a week, a month, etc. It is the money an employee receives from his/her employer by rendering his/her services. House Rent Allowance Organizations either provide accommodations to its employees who are from different state or country or they provide house rent allowances to its employees. This is done to provide them social security and motivate them to work. Conveyance Organizations provide for cab facilities to their employees. Few organizations also provide vehicles and petrol allowances to their employees to motivate them.
Leave Travel Allowance These allowances are provided to retain the best talent in the organization. The employees are given allowances to visit any place they wish with their families. The allowances are scaled as per the position of employee in the organization. Medical Reimbursement Organizations also look after the health conditions of their employees. The employees are provided with medi-claims for them and their family members. These medi-claims include health-insurances and treatment bills reimbursements. Bonus Bonus is paid to the employees during festive seasons to motivate them and provide them the social security. The bonus amount usually amounts to one month’s salary of the employee. Special Allowance Special allowance such as overtime, mobile allowances, meals, commissions, travel expenses, reduced interest loans; insurance, club memberships, etc are provided to employees to provide them social security and motivate them which improve the organizational productivity.
2. Indirect Compensation
Indirect compensation refers to non-monetary benefits offered and provided to employees in lieu of the services provided by them to the organization. They include Leave Policy, Overtime Policy, Car policy, Hospitalization, Insurance, Leave travel Assistance Limits, Retirement Benefits, Holiday Homes. Leave Policy It is the right of employee to get adequate number of leave while working with the organization. The organizations provide for paid leaves such as, casual leaves, medical leaves (sick leave), and maternity leaves, statutory pay, etc. Overtime Policy Employees should be provided with the adequate allowances and facilities during their overtime, if they happened to do so, such as transport facilities, overtime pay, etc. Hospitalization The employees should be provided allowances to get their regular check-ups, say at an interval of one year. Even their dependents should be eligible for the medi-claims that provide them emotional and social security.
Insurance Organizations also provide for accidental insurance and life insurance for employees.
This gives them the emotional security and they feel themselves valued in the organization. Leave Travel The employees are provided with leaves and travel allowances to go for holiday with their families. Some organizations arrange for a tour for the employees of the organization. This is usually done to make the employees stress free. Retirement Benefits Organizations provide for pension plans and other benefits for their employees which benefits them after they retire from the organization at the prescribed age. Holiday Homes Organizations provide for holiday homes and guest house for their employees at different locations. These holiday homes are usually located in hill station and other most wanted holiday spots. The organizations make sure that the employees do not face any kind of difficulties during their stay in the guest house. Flexible Timings Organizations provide for flexible timings to the employees who cannot come to work during normal shifts due to their personal problems and valid reasons. Need of Compensation Management
?
A good compensation package is important to motivate the employees to increase the organizational productivity.
?
Unless compensation is provided no one will come and work for the organization. Thus, compensation helps in running an organization effectively and accomplishing its goals.
?
Salary is just a part of the compensation system, the employees have other psychological and self-actualization needs to fulfill. Thus, compensation serves the purpose.
?
The most competitive compensation will help the organization to attract and sustain the best talent. The compensation package should be as per industry standards.
Strategic Compensation Strategic compensation is determining and providing the compensation packages to the employees that are aligned with the business goals and objectives. In today’s competitive scenario organizations have to take special measures regarding compensation of the employees so that the organizations retain the valuable employees. The compensation systems have changed from traditional ones to strategic compensation systems.
Employee Compensation
Compensating an employee is not simply a process of settling upon a mutually agreeable salary. There are a number of regulations and reporting requirements that need to be met. Here is some information a variety of issues surrounding compensation that you need to be aware of. Competitive Wages When deciding pay rates for skilled workers, it may be helpful to keep tabs on the going rates for your industry and area. The U.S. Department of Labor's Bureau of Labor Statistics Web site maintains a comprehensive list of median and mean salaries across the United States by occupation, industry and area of the United States. Minimum Wage Requirements The Fair Labor Standards Act (FLSA) establishes current minimum wage requirements for employees. Exceptions include lower wages for employees under 20 years of age for
a defined period of time, certain full-time students, apprentices, interns and workers with disabilities. Many states also have minimum wage laws. In cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages. Overtime Wages The rate for all hours worked over a 40 hour workweek are at least 1 1/2 times an employee's regular rate of pay. Some exceptions to overtime pay include administrative or executive employees, which fall under the "white collar exemption," as well as outside sales employees. Child Support Enforcement Every U.S. employer, large and small, must comply with state and federal laws pertaining to child support enforcement. The three principal requirements include: 1. You must report all newly hired employees to your State Directory of New Hires. 2. When you receive a valid Order or Notice to Withhold Income for Child Support for an employee, you must follow the terms of the Order/Notice and deduct the specified amount from each paycheck within the allowable limits. This amount must then be remitted within designated timeframes. 3. You must provide information to the state or local child support enforcement agency for information about an employee, such as information about his or her earnings, current residence, and health insurance coverage, and report the termination of an employee for whom you are withholding child support (whether the employee is fired, resigns or is temporarily laid off). Wage Garnishment Wage garnishment occurs when an employer withholds the earnings of an individual for the payment of a debt as the result of a court order or other equitable procedure. Learn about employers' responsibilities and employees' rights. Student Loan Garnishment Actions Section 488A of the Higher Education Act authorizes the U.S. Department of Education and student loan guarantors to collect defaulted federally-financed student loans by means of an administrative garnishment order to the former student's employer, without the need for a court order. Employee Benefit Plans The Employee Retirement Income Security Act (ERISA) sets uniform minimum standards required by federal law to ensure that employee benefit plans are established and maintained in a fair and financially sound manner. Workers' Compensation Programs Learn the ins and outs of general federal and state workers' compensation rules, or look up specialized programs to aid coal miners, longshoremen and workers from other industries.
Workers Compensation Insurance
Workers' Compensation is a no-fault insurance system that provides wage replacement, medical, and rehabilitation benefits to employees that are injured at work. Being no-fault, it requires the employer to be responsible for the payment of benefits irrespective of who or what caused or contributed to an injury or illness that is connected with a job. Almost every state requires that employers purchase workers' compensation insurance. Coverage of workers tends to be fairly comprehensive, although state workers' compensation laws often exempt domestic, farm, and other "casual" workers. Moreover, independent contractors, being self-employed, are not covered by these laws. The laws governing the amount and duration of lost income benefits, the provision of medical and rehabilitation services, and how the system is administered vary from state to state. Check with your state about what the laws are for your business. If you do business in more than one state, you will need to comply with the laws in each state in which you have offices with permanent employees.
http://www.citehr.com/68382-what-definition-compensation-management.html? time=1271960195#1271960195#ixzz0lr1x1KPu
doc_295552886.doc