Description
The PPT explains of employee compensation and benefits.
Managing Employee Compensation
You should be clear about….
• What is Compensation
• How to differentiate between jobs for compensation • Compensation Strategies • Compensation design • Deciding individual compensation • Strategic implications of compensation management • Managerial role in compensation
A Perspective
Traditional SALARY
•Expense perspective •Focus on salary administration ComPenSation
Transformational REWARD
•Investment perspective •Focus on achievement of strategic outcomes through reward management
What is Compensation
• A return for the services provided by the employee • Reward and Total Reward
• Tangible Rewards • Quality of Work • Work-life balance • Inspiration/values • Enabling Environment • Future Growth Opportunity
Compensation Strategy
People Philosophy
HRM Strategy
Compensation Strategy
Compensation Strategies
• Lead V/s Lag – pay more than market or less than market or on par (may also vary by roles)
• Pay to Attract or Retain – good start, slow start, varying proportion of deferred benefits • Fixed V/s Variable Pay • Pay person V/s Pay performance • Pay job V/s pay individual • Monetary V/s non-monetary compensation
Compensation Strategy Framework
Pay Assessment •Job v/s person •Result v/s behaviour •Seniority v/s performance •Education v/s skills
Pay Delivery
•Narrow v/s broad band •Small v/s large overlap •Open v/s closed commn.
Pay Form •Monetary V/s nonmonetary Pay philosophy •Fixed v/s variable • internal v/s •Individual v/s team
external equity •Led v/s lag market •Attraction v/s retention
Pay Plan Design •Participative v/s non •Centralised v/s de •Static v/s dynamic
Compensation Design
• Pay hierarchy – job evaluation, job clusters • How is it structured? • Graded Structure • Broad –banding
• Components –
– basic pay, Allowances, Benefits, perquisites ( cafeteria) – Monetary and non-monetary – Monthly, quarterly, annual, statutory
• Fixed and variable • Team and individual
Examples
• Graded Structure
1000-350-12100-400-14500-450-17200-500-20200-550-23500 • Defined rate of progression • Simplicity • Fixed wage burden • Difficult to differentiate between performance levels
• Broad Band
16000-37000 • Flexible progression rate • Greater control over wage bill • Can differentiate between performance levels Needs to be supported by performance measurement systems
•
These structures are applicable for basic salary only
Allowances and Benefits
• Allowances – cash payments, generally with
monthly salaries; nature and quantum can vary with jobs; can be paid as a fixed quantum or related to basic salary levels
• Benefits – can be in monetary form (phone bills
– if not job related -, insurance, loans, subsidies, etc.) or non-monetary (vacation, medical facilities, etc.)
Statutory Benefits
• Provident Fund – social security measure, contributory fund (by employer and employee both), available on superannuation or leaving employment • Pension Fund • Gratuity • Bonus • Employees State Insurance
Regulatory Framework
• • • • • Payment of Wages Act Minimum Wages Act Payment of Bonus Act Payment of Gratuity Act Equal Remuneration Act
Regulates minimum wages payable, frequency, permissible deductions, overtime payments; specifies administrative compliances and penalties for non compliances
Objectives of Compensation Management – the strategic implication
• Support the achievement of organisation’s objectives • Communicate organisation’s values and performance expectations • Support culture development and change – drive and support desired behaviour • Promote continuous development • Compete in the employment market • Achieve fairness and equity ATTAIN, RETAIN, AND SUSTAIN EMPLOYEES
These contexts influence compensation in organisations….
INTERNAL
• Organisation culture • Organisation structure • Employee relations
• Strategic focus
• Compensation Design • Compensation Structure • Compensation Decisions
• Employment practices
• Affordability EXTERNAL
• Market
• Statutory needs • Cost of living
Some Fundamental Principles
• Internal Equity – job evaluation • External Equity – market surveys, trade surveys • Dignity of the individual – pay is a measure of self worth • Confidentiality – respect for individual privacy • Transparency of process and decision making • Timeliness • Fairness of decision making
Managerial Role
• Strategic Alignment
• Policy and procedural framework • Statutory compliances • Individual pay decisions - how much to pay and to whom
• Timeliness of reward
• Communicating strategy, policy, pay decisions
Thank You
doc_386142340.ppt
The PPT explains of employee compensation and benefits.
Managing Employee Compensation
You should be clear about….
• What is Compensation
• How to differentiate between jobs for compensation • Compensation Strategies • Compensation design • Deciding individual compensation • Strategic implications of compensation management • Managerial role in compensation
A Perspective
Traditional SALARY
•Expense perspective •Focus on salary administration ComPenSation
Transformational REWARD
•Investment perspective •Focus on achievement of strategic outcomes through reward management
What is Compensation
• A return for the services provided by the employee • Reward and Total Reward
• Tangible Rewards • Quality of Work • Work-life balance • Inspiration/values • Enabling Environment • Future Growth Opportunity
Compensation Strategy
People Philosophy
HRM Strategy
Compensation Strategy
Compensation Strategies
• Lead V/s Lag – pay more than market or less than market or on par (may also vary by roles)
• Pay to Attract or Retain – good start, slow start, varying proportion of deferred benefits • Fixed V/s Variable Pay • Pay person V/s Pay performance • Pay job V/s pay individual • Monetary V/s non-monetary compensation
Compensation Strategy Framework
Pay Assessment •Job v/s person •Result v/s behaviour •Seniority v/s performance •Education v/s skills
Pay Delivery
•Narrow v/s broad band •Small v/s large overlap •Open v/s closed commn.
Pay Form •Monetary V/s nonmonetary Pay philosophy •Fixed v/s variable • internal v/s •Individual v/s team
external equity •Led v/s lag market •Attraction v/s retention
Pay Plan Design •Participative v/s non •Centralised v/s de •Static v/s dynamic
Compensation Design
• Pay hierarchy – job evaluation, job clusters • How is it structured? • Graded Structure • Broad –banding
• Components –
– basic pay, Allowances, Benefits, perquisites ( cafeteria) – Monetary and non-monetary – Monthly, quarterly, annual, statutory
• Fixed and variable • Team and individual
Examples
• Graded Structure
1000-350-12100-400-14500-450-17200-500-20200-550-23500 • Defined rate of progression • Simplicity • Fixed wage burden • Difficult to differentiate between performance levels
• Broad Band
16000-37000 • Flexible progression rate • Greater control over wage bill • Can differentiate between performance levels Needs to be supported by performance measurement systems
•
These structures are applicable for basic salary only
Allowances and Benefits
• Allowances – cash payments, generally with
monthly salaries; nature and quantum can vary with jobs; can be paid as a fixed quantum or related to basic salary levels
• Benefits – can be in monetary form (phone bills
– if not job related -, insurance, loans, subsidies, etc.) or non-monetary (vacation, medical facilities, etc.)
Statutory Benefits
• Provident Fund – social security measure, contributory fund (by employer and employee both), available on superannuation or leaving employment • Pension Fund • Gratuity • Bonus • Employees State Insurance
Regulatory Framework
• • • • • Payment of Wages Act Minimum Wages Act Payment of Bonus Act Payment of Gratuity Act Equal Remuneration Act
Regulates minimum wages payable, frequency, permissible deductions, overtime payments; specifies administrative compliances and penalties for non compliances
Objectives of Compensation Management – the strategic implication
• Support the achievement of organisation’s objectives • Communicate organisation’s values and performance expectations • Support culture development and change – drive and support desired behaviour • Promote continuous development • Compete in the employment market • Achieve fairness and equity ATTAIN, RETAIN, AND SUSTAIN EMPLOYEES
These contexts influence compensation in organisations….
INTERNAL
• Organisation culture • Organisation structure • Employee relations
• Strategic focus
• Compensation Design • Compensation Structure • Compensation Decisions
• Employment practices
• Affordability EXTERNAL
• Market
• Statutory needs • Cost of living
Some Fundamental Principles
• Internal Equity – job evaluation • External Equity – market surveys, trade surveys • Dignity of the individual – pay is a measure of self worth • Confidentiality – respect for individual privacy • Transparency of process and decision making • Timeliness • Fairness of decision making
Managerial Role
• Strategic Alignment
• Policy and procedural framework • Statutory compliances • Individual pay decisions - how much to pay and to whom
• Timeliness of reward
• Communicating strategy, policy, pay decisions
Thank You
doc_386142340.ppt