Description
This is a PPT explains the objective, components and factors affecting the compensation.
COMPENSATION MANAGEMENT
Compensation Management
• Compensation is what employees receive in exchange for their contribution to the organisation.
• Total compensation =
Direct + Indirect Compensation
Base Pay
Incentives
Benefits
Objectives of Compensation
1.
2. 3. 4. 5. 6.
Equitable- Each person should be paid fairly, in line with his effort, abilities & training. Balanced- Pay, benefits & other rewards should provide a reasonable total reward package. Cost- effective- Pay should not be excessive, considering what the organization can afford to pay. Secure- Pay should be enough to help an employee feel secure and aid him in satisfying his basic needs Incentive-Providing- Pay should motivate effective & productive work. Acceptable to the Employee- The employee should understand the pay system & feel it is a reasonable system for the enterprise and himself.
Compensation Dimension
1. 2. 3. 4. 5. Pay for work and Performance Pay for time Not worked Disability Income Continuation Deffered Income Spouse (Family )Income Continuation
Components of Compensation
Remuneration Financial Basic wages Fringe Benefits P.F. Medical care Accident relief Health Insurance Perquisites Car, Club membership Paid holidays Furnished house Stock option scheme Non-financial
Incentives, Individual plans Group plans
Job Context Challenging job Responsibilities Growth prospects Supervision Working conditions Job sharing etc
Factors Influencing Compensation
Compensation
External ?Labour Market ?Cost of Living ?Labour Unions ?Govt. Legislations ?Economy
Internal ?Business Strategy ?Job evaluation & PA ?The Employee
Compensation Approaches
Traditional Approach Total Rewards Approach
• Compensation is primarily base pay • Bonuses are for executives only • Fixed benefits tied to long tenure
• Variable pay used with base pay • Annual/long-term incentives provided to all employees • Knowledge-based broadbands determine pay grades • Multiple pay plans consider job family, location, and business units
• Pay grade progression is based on organizational promotions
• One organization-wide pay plan for all employees
Devising a Remuneration Plan
Job Description
Job Evaluation
Job Hierarchy
Pay Survey
Pricing Jobs
Importance of an Ideal Remuneration System
Desire for more pay performance strikes grievances search for options
absenteeism turnover
Pay dissatisfaction
lower attractiveness of jobs job dissatisfaction absenteeism psychological withdrawal, visits to the Doctor, poor mental health
3 P’s of Compensation
• Paying for Position • Paying for Person • Paying for Performance
Challenges of Compensation
Skills-based pay Salary reviews
Employee participation
Remuneration
Pay secrecy
Comparable worth
doc_785326604.ppt
This is a PPT explains the objective, components and factors affecting the compensation.
COMPENSATION MANAGEMENT
Compensation Management
• Compensation is what employees receive in exchange for their contribution to the organisation.
• Total compensation =
Direct + Indirect Compensation
Base Pay
Incentives
Benefits
Objectives of Compensation
1.
2. 3. 4. 5. 6.
Equitable- Each person should be paid fairly, in line with his effort, abilities & training. Balanced- Pay, benefits & other rewards should provide a reasonable total reward package. Cost- effective- Pay should not be excessive, considering what the organization can afford to pay. Secure- Pay should be enough to help an employee feel secure and aid him in satisfying his basic needs Incentive-Providing- Pay should motivate effective & productive work. Acceptable to the Employee- The employee should understand the pay system & feel it is a reasonable system for the enterprise and himself.
Compensation Dimension
1. 2. 3. 4. 5. Pay for work and Performance Pay for time Not worked Disability Income Continuation Deffered Income Spouse (Family )Income Continuation
Components of Compensation
Remuneration Financial Basic wages Fringe Benefits P.F. Medical care Accident relief Health Insurance Perquisites Car, Club membership Paid holidays Furnished house Stock option scheme Non-financial
Incentives, Individual plans Group plans
Job Context Challenging job Responsibilities Growth prospects Supervision Working conditions Job sharing etc
Factors Influencing Compensation
Compensation
External ?Labour Market ?Cost of Living ?Labour Unions ?Govt. Legislations ?Economy
Internal ?Business Strategy ?Job evaluation & PA ?The Employee
Compensation Approaches
Traditional Approach Total Rewards Approach
• Compensation is primarily base pay • Bonuses are for executives only • Fixed benefits tied to long tenure
• Variable pay used with base pay • Annual/long-term incentives provided to all employees • Knowledge-based broadbands determine pay grades • Multiple pay plans consider job family, location, and business units
• Pay grade progression is based on organizational promotions
• One organization-wide pay plan for all employees
Devising a Remuneration Plan
Job Description
Job Evaluation
Job Hierarchy
Pay Survey
Pricing Jobs
Importance of an Ideal Remuneration System
Desire for more pay performance strikes grievances search for options
absenteeism turnover
Pay dissatisfaction
lower attractiveness of jobs job dissatisfaction absenteeism psychological withdrawal, visits to the Doctor, poor mental health
3 P’s of Compensation
• Paying for Position • Paying for Person • Paying for Performance
Challenges of Compensation
Skills-based pay Salary reviews
Employee participation
Remuneration
Pay secrecy
Comparable worth
doc_785326604.ppt